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GASB andGASB andASSET MANAGEMENTASSET MANAGEMENT
at the at the Oregon Department of TransportationOregon Department of Transportation
How They Relate
By Laura Wipper and Jesse MooreJune 2008
STAYING AHEAD OF THE CURVE...
ASSETMANAGEMENT
ODOT
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Topics We’ll CoverTopics We’ll Cover
Financial issues – who cares? GASB – compliance & accountability Early implementation of GASB at ODOT Assets – definition & categories Asset Management & GASB
How they relateThings we’re working onBenefitsSuggestions for the future
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Financial Issues – Who Cares?Financial Issues – Who Cares?
When it comes to accounting, reporting, measuring, it’sGASB
One of two boards under umbrella of FAFFASB is the other
Major input provided by AGA & GFOA
When it comes to financing and bonding, it’sSEC IRS
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What is GASB?What is GASB?
Government Accounting Standards Board Charged with establishing and
improving financial accounting and reporting by state, county, city and other local governments
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Do We Have to Comply?Do We Have to Comply?
Federally mandatedFederal Circular A-133 (Audits of States, Local Governments and Non Profit
Organizations) issued pursuant to the Federal Single Audit Act of 1984
Required by ORS 291.040:State financial report. (1) Within 180 days of the close of each fiscal year, the
Oregon Department of Administrative Services shall prepare a financial report for the State of Oregon. The report shall contain financial statements which fairly present the financial condition and results of operation of the State of Oregon in accordance with current, generally accepted accounting principles and such other financial and statistical information as may be necessary to completely and accurately disclose the financial condition and financial operations of the state and its various agencies.
(2) As used in subsection (1) of this section, “generally accepted accounting principles” means those accounting principles sanctioned by recognized authoritative bodies such as the Governmental Accounting Standards Board, the American Institute of Certified Public Accountants or their successors. [1977 c.897 §1; 1989 c.152 §1; 1991 c.220 §6]
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How is This Accomplished?How is This Accomplished?
ODOT:Follows
Generally Accepted Accounting Principles (GAAP) GASB pronouncements
Statements that become standards Federal and state requirements
Assists DAS with preparation of the Comprehensive Annual Financial Report (CAFR)
DAS issues state government CAFR annuallyFed by ODOT’s own AFR
Issued for bonding purposes
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How are Gov’ts Held Accountable?How are Gov’ts Held Accountable?
AuditsFederalSecretary of State, Audits Division Internal External
Holding others accountable
Requirements met equals “clean opinions” ODOT’s report reviewed annually
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GASB 34GASB 34
Statement that became standard in 1999Sweeping changes in financial reporting
requirements for state and local governments Significant restructuring Most dramatic change since 1930’s
Staged implementation Beginning in 2001
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Goals of GASB 34Goals of GASB 34
Expand government financial reporting requirementsContinue Fund Reporting - short-term
perspectiveAdd Financial Statements - long-term
perspective Includes all assets, liabilities, revenues, expenses,
gains and losses Comprehensive demonstration of stewardship
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DefinitionsDefinitions
What is an Asset? Anything with
Expected useful life of one year or moreOriginal cost of $5000 or greater (OAM
15.60.10 PO section .103)
Costs for components as a system
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Two Approved Approaches to Report Two Approved Approaches to Report Infrastructure Assets:Infrastructure Assets:
Modified Challenging method used
by many DOT’s requires: Full catalogue of inventory Condition levels Defined inspection
schedules Maintenance costs tracked
to individual assets Comparisons between
actual and estimated costs for past 5 years
Depreciation ODOT’s present
method requires: Asset values Asset age Depreciation
methodology
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Issues for ODOT & GASB 34 at Issues for ODOT & GASB 34 at ImplementationImplementation
Data “hurdle” to meet requirement to report on value of infrastructure assets Inventory, values and depreciation methodology
Absence of procedures and methods for asset management system
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Solutions to Meet Implementation Solutions to Meet Implementation TimelineTimeline Financial Services staff created version of
asset management systemsProcedures and processes to account for
assets Definitions Values Depreciation methodologies Processes to account for new assets and works in
progressMust be “capitalized” when complete
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Financial Categories of AssetsFinancial Categories of Assets
Fixed Assets (AKA non-linear) such as:Right of wayEquipment Information technologyFacilities
Infrastructure Assets (AKA linear)Bridges and TunnelsHighway
Intangibles - pending requirement
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Current and Emerging IssuesCurrent and Emerging Issues
Driven by compliance requirements: Narrowing tolerance has resulted in findings
Current efforts to correct issues have managed to keep these at a reduced level of significance
Increasing expectations and decreasing tolerances - more challenging in the future, i.e.,
472 structures – values or else Works in process Things built with maintenance dollars
Others driven by business needs and accountability
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Some Reasons for Audit FindingsSome Reasons for Audit Findings
Definitions not consistentAsset categoriesWork type
I.e., Construction, preservation, maintenance
Depreciating too fastNot getting all or accurate costs
Works in progress is only part of the issue
Rate not matching useful life
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What’s the Hammer?What’s the Hammer?
Repeat significant audit findings meanIncreasing oversight by
Audits Division Feds FHWA
Potential impacts to bond rating Mortgage crisis makes this more and more of
a reality
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Asset Management & GASBAsset Management & GASB
Asset Management efforts can provide means to comply with requirements
GASB standards can provide structure for asset data
Effectively blended – sets the stage for much improved financial informationEnabled by ERP/integrated system
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Working on the IssuesWorking on the Issues
Improving communicationODOT Financial Reporting staff, Asset Mgmt staff,
asset owners, etc. Understanding and solving issues
Improving asset data InventoryUpdates
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Asset Asset List:List:
(Draft To Date)(Draft To Date)
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Features Features Attributes & Attributes & Conditions Conditions SurveySurvey
(FACS):(FACS):(Draft To Date)(Draft To Date)
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Other Things to be Aware ofOther Things to be Aware of
Asset Management efforts also positions the agency to revisit financial reporting approach (Depreciation or Modified)Changing to the Modified approach requires
well established and integrated sources of data across assets (still years away)
Accountabilities in Modified approach may be difficult to sustain
Requires condition levels, targets and investments to keep them there
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Suggestions for the FutureSuggestions for the Future Continued communication! Work together on definitions
Assets first, activities later Continue to work on shared solutions
Data that can be integrated (now or later) Revise asset list for shared purpose “Right size” asset data and management
programs Position to support and relate
Ease of efforts later
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Questions?Questions?