Loading...
HomeMy Public PortalAboutResolution 11-95 Adopting Capital Acquisition Policyw RESOLUTION NO. 11-95 A RESOLUTION OF THE MAYOR AND COUNCIL OF THE CITY OF MCCALL, IDAHO, RELATING TO FINANCE, ADOPTING A CAPITAL ACQUISITION POLICY WHEREAS: The mayor and council desire to formally adopt policies for acquiring and accounting for capital property, plant and equipment. NOW, THEREFORE, BE IT RESOLVED by the mayor and city council of McCall, Idaho, as follows: Section 1: That the Capital Acquisition Policy, annexed hereto and made a part of this resolution as if set forth in its entirety herein, is hereby adopted. Section 2: That the City Clerk be, and the same is hereby .authorized and directed to adjust property inventories and accounting records to conform to this policy. PASSED AND APPROVED this 27th day of April 1995. ATTEST: CAPITAL ACQUISITION POLICY 1.0 Purpose: The purpose of this document is to describe the City's policy respecting capital acquisitions, their budgeting, approval, purchase, accounting, inventory and disposition. 2.0 Definition of Terms: The following terms, as used in this document, have the meaning stated. All others have their usual meaning. 2.1 Capitalization. The process of exchanging liquid assets (e.g. cash) for fixed assets (e.g. equipment). The .city is not economically better or worse off with such a transaction as the city's net worth is unchanged. 2.2 Capital Item. Property, including: land; buildings; improvements, other than buildings, on land; or equipment with.a cost of $2,500 or more and a useful life of more than one year. included are attachments to equipment (e.g. a snowplow) but not including components of equipment, without which the equipment could not -operate (e.g. Engines or transmissions). Capital -items are recorded as fixed assets in the balance sheet of proprietary funds and in the General Fixed Asset Account Group for other funds. Synonymous with Fixed Asset. Public Domain (infrastructure) items are not recorded as -assets as they are regarded as .public (rather than city) property over which the city exercises stewardship rather than ownership. An .example of public domain property is a public right-of-way :and the .street and/or sidewalk constructed on it. 2.3 Minor Equipment. Items of equipment with an expected useful life of more than one year but are not capitalised because their cost ,is less than $2,500. Such items are treated as expenditures. 2.4 Depreciation. Fixed assets are used in operations with no discernible reduction in their quantity. Such assets wear out with use and their usefulness decreases over time. This decrease in usefulness .is an expense of operation called depreciation. 2.5 Self -constructed Assets. Assets that are constructed using city employees and equipment. 2.6 Competitive Bid Process. A formal process of inviting bids on capital projects or equipment. This process is required on expenditures of more than $25,000. 2.7 Developer Contributed Assets. Assets that are constructed by developers as a required part of a development such as a subdivision and at some point are dedicated.to.the :city. 3.0 Budgeting: Capital items will be shown as separate line items and department budget requests and" on the final approved budget document. Budget requests will include the estimated cost of the item to ,include everything necessary to make the asset suitable for its intended purpose. Estimates should include freight, painting, options and :other ancillary items which must .be accomplished or .acquired to make the .asset perform its intended function. It there are revenue items associated with the capital purchase, such as grants or financing, that fact, the amount of 'revenue anticipated, and whether or not :such grant or financing his been approved will accompany the request. 4.0 Approval: Capital items are approved along with the approval of the city budget. Department heads may make purchases (or when required commence the competitive bid process) when the budget is approved. Capital items that are approved subject to grant award or financingapproval will not be purchased until such approval has, been received: 5.0 Purchasing: Purchasing will be accomplished in accordance with the City's purchasing policy. That is, all capital purchases will .be made using .a .purchase order signed by ,the City Clerk and the City Manager. b- • 3- 6.0 Accounting: Capital items will be recorded at their historic cost, including .all ancillary items as discussed above. If the historic cost is unknown, they will be recorded at estimated historic cost. Donated items will be recorded :at fair value at .the time donated. Fixed assets acquired by governmental and fiduciary funds are recorded in the General Fixed Asset Account Group (GFAAG). No depreciation is recorded in the GFAAG. Fixed assets purchased by proprietary funds are recorded .in those funds. Depreciation is recorded in proprietary funds only. Self constructed: assets will be recorded at cost including materials, labor and equipment time. Developer contributed assets will be recorded at cost as stated in the development agreement. 7.0 inventory: Capital items reflect a significant investment of public funds. All city employees will _take steps to protect these assets from loss or damage. Additionally, the City Clerk will select, at random, a list of approximately 25% of the total number of assets owned. Each department head will physically exam each item listed, confirm its existence and note its condition. Missing items will be reported to the City Manager. 8.0 Disposition: At times capital items become so worn out or obsolete that they are no longer useful or due to changing circumstances are simply no longer needed. At such times, the circumstances will be set forth in writing and the staff will recommend that the council declare the property surplus. When declared surplus such property may be disposed of as follows: 8.1 By donating it to another local or state government. 8.2 By selling it a public auction. The City Clerk will periodically conduct a surplus property sale. 8.3 By scrapping, recycling or otherwise discarding the item in the most ecologically responsible way practical. 9.0 Depreciation: Depreciation represents the estimated loss of value of a fixed asset through use in the production of income. Because government fund types have a spending measurement focus rather than an earnings focus, depreciation is not recorded on General Fixed Assets. Depreciation shall be, however, budgeted and recorded on proprietary fund fixed assets. [1400.116 Codification of Government Accounting and 'financial Reporting Standards, 1994.1