Resolution No. 02-31 CITY OF TIGARD, OREGON
RESOLUTION NO. 02- ->
A RESOLUTION TO ADOPT A REVISED FIXED ASSET POLICY TO BE EFFECTIVE JULY 1,2002
WHEREAS, the City of Tigard is in need of a Fixed Asset Policy to set guidelines in tracking and
controlling the City's capital assets,and
WHEREAS, in June 1999, the Governmental Accounting Standards Board (GASB) issued Statement No.
34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local
Governments, and
WHF.RFAS, this new statement established a whole new financial reporting framework and reporting
model that impacts how fixed assets are recorded and reported, and
WHEREAS, the Government Finance Officers Association (GFOA) has adopted a recommended practice
that advises governments of all sizes not to establish capitalization thresholds of less than$5,000, and
WHEREAS,by the City of Tigard adopting the GFOA recommended practice, the City can reduce the cost
of complying with the capital asset reporting provisions of GASB Statement No. 34 without adversely
affecting the quality of the City's financial reporting, and
WHEREAS, the City of Tigard will be required to meet the new reporting standard by the end of Fiscal
Year 2003.
NOW,THEREFORE,BE IT RESOLVED by the Tigard City Council that:
SECTION 1: The Fixed Asset Policy, attached hereto as Exhibit A,is hereby adopted.
EFFECTIVE DATE: July 1,2002
PASSED: This day of -f"— ,2002.
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ATTEST:
City Recorder-City of Tigard
RESOLUTION NO. 02-,3
Page I
Exhibit A
CITY OF TIGARD
FIXED ASSET (CAPITAL ASSET)MANAGEMENT SYSTEM
PURPOSE:
The purpose of the fixed asset management system is to:
1. Control City capital assets by assigning accountability and responsibility to specific
departments.
2. Provide documentation of equipment loss to the insurance companies in the event of losses
due to fire or theft.
3. Provide information such as depreciation and obsolescence needed for City's enterprise
funds(Water, Sewer, and Storm Drain).
4. Provide budget information for capital replacements and additions.
5. Provide information of all City equipment and thereby avoiding duplication of equipment.
6. Provide a list of all assets and their values to assure that capital assets are properly insured.
DEFINITION OF FIXED ASSETS:
In order for expenditure to be considered a Fixed Asset, a few tests need to be passed.
Expenditure must meet all the following criteria.
1. The cost of the asset must be equal to or greater than$t—=; effective July 1, 2002.
Cost is defined as all charges necessary to prepare the asset for rendering service(s).
Z. The useful life of-the item must be greater than one year.
3. The expenditure is complete in and of itself.
4. The expenditure does not lose its identity or become a component of another item.
5. The transaction falls into one of the following categories:
a) Original acquisition that constitutes a new capital asset to City of Tigard. This asset can
be acquired through purchase or new construction;
b) Expansion or improvement that adds to or improves the function use of the existing
capital asset and for which the benefit will be received for a significant time over the life
of the asset. The cost of the improvement should be significant in relation to the cost of
the asset;
c) Rehabilitation or Replacement—a replacement or major construction that extends the full
useful life of the existing capital asset or so the asset can provide a broader range of
services. This can represent either total or partial replacement.
SPECIFIC FIXED ASSET CATAGORIES: ACCOUNTS
1. Land and Improvements(original cost, filling, grading, drainage, legal costs) 701000
2. Buildings and Improvements(original cost,plus additions) 702000
3. Vehicles (includes equipment that is licensed for the highway) 703000
4. Office Equipment (cost plus freight and installation) 704000
5. Operation Machinery and Equipment(cost plus freight and installation) 706000
ASSETS NOT CONSIDERED FIXED ASSETS:
1. Repairs or maintenance of equipment.
2. Cash and securities
3. Public Works stock inventory
4. Equipment and tools costing less than$2,500
5. Materials to be consumed in operation and maintenance, such as chemicals,
automotive parts, etc.
PROCEDURE OF RECORDING FIXED ASSETS:
Additions: During the fiscal year, the Finance Department will record fixed asset additions after
invoices are paid. Items will then be tagged with a properly ID number.
Deletions: All departments are to notify the Finance Department by filling out the"RFA-
Removal of Surplus Items" form when fixed assets are ready to be sold,traded-in, sent to the
State for auction or discarded. The City Manager shall approve all items before item leaves the
City premises.
Adjustments:
1. Transfers: This type of adjustment record's intra-City transfers of assets, as well as changes
of information relating to the asset(s). Surplus assets will remain in storage until it is
determined that: (a)the asset is to be transferred to another department; (h)the asset is sold;
or(c)the asset is otherwise disposed of.
2. Other Adjustments: All other adjustments to fixed assets.
PROCEDURE FOR PROPERTY DISPOSTION:
The following procedures is to be followed by departments in disposing of surplus City personal
property:
1. Personal property owned by the City may be disposed of only after being declared surplus
by the City Manager or designee(Tigard's AR 60.00)
City of Tigard-Fixed Asset(Capital Asset)Management System Page 2
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2. If existing personal property is being replaced by new, it should be traded-in on the new
equipment. The only exceptions for not trading in the old personal property are;
a) It is of more value to another City department and will be used by that department.
b) It can be sold for substantially more money than offered by the trade-in.
c) A vendor won't accept it because of either no value or the City is buying on a state
contract that does not allow for trade-ins.
3. If the surplus equipment is not traded in:
a) The responsible department should complete the "RFA—Removal of Surplus Items"
form and forward it to the Finance Department.
b) The surplus will then be put into storage and the Finance Department will then offer the
item(s) to the other City departments by listing it on the Intra-Net.
c) The Finance Department will be responsible for final disposal of surplus by sending it to
the State of Oregon Property Distribution Center for auction or completing one of the
below options "(d), (e), or(f)".
d) The City may sell personal property per AR 60.015 and 60.020. The Department
disposing of the surplus will work with the Finance Department for completing this
process according to the Administrative Rules.
c) The City may donate personal property per AR 60.025.
0 The City may trade personal property per AR 60.030.
g) The Finance Department will make the appropriate bookkeeping entries in the Fixed
Asset records of all additions,deletions and adjustments.
PROCEDURE FOR PHYSICAL INVENTORY:
The physical verification of the City's Fixed Assets is very important for audit reports, the
insurance agent in determining the adequacy of the City's insurance program and to the Finance
Department in administering accountability and control of City property.
The procedure for taking the,physical inventory is as follows-
I. Each department will appoint a fixed asset custodian. Each custodian will be responsible for
periodic inventories of assets and the overall management of the department's fixed assets.
2. Periodically the Finance Department will send to each department the listing of the
departmental equipment.
3. The information on the listing of each asset should be reviewed. Incorrect information
should be marked and correct information or additional information should be noted on the
listing.
4. Once the inventory has been completed, the inventory listing shall be returned to the Finance
Department with the department head signature. This certifies that the inventory was taken
and the listing is correct as noted
City of Tigard-Fixed Asset(Capital Asset)Management System Page 3
Revised 03/29/02