M E M O R A N D U M

 

 

TO:

Robin Wilkes, Debra White, Angela Feaster, and Carl Chase; Department of Transportation[1]

FROM:

Central State Financial Reporting Division

DATE:

June 8, 2001

SUBJECT:

GASB 34—-Infrastructure Reporting PoliciesInformation

 

INTRODUCTION

The Comptroller General’s Office will limit the reported “infrastructure” category of capital assets within the State’s primary government to the Department of Transportation’s (DOT’s) roads and bridges.  The DOT will report the roads and bridges owned by the State.  Also, in the absence of clear title to a particular roadway or bridge, the DOT should report the asset if the State is responIof both governmental and proprietary funds should be capitalized by the entity sible for future maintenance.[2]

The Department of Transportation’s roads and bridges meet the definition of general infrastructure assets.  The term general infrastructure assets refers to those infrastructure assets that are associated with, and generally arise from, governmental activities.  In determining the roads and bridges that DOT needs to report under GASB 34, you must consider general infrastructure assets in two different groups:

  1. Roads and bridges acquired on or before June  30,  2001, or earlier, and
  2. Roads and bridges acquired on or after July  1,  2001, or later.

REPORTING ROADS AND BRIDGES ACQUIRED ON OR BEFORE JUNE  30,  2001, OR EARLIER

The State of South Carolina is required to report major general infrastructure assets acquired on or before June  30,  2001[3], or earlier.  Only major general infrastructure assets acquired or significantly improved in fiscal years ending after June  30,  1980, are required to be reported.  The determination of major general infrastructure assets is made at the network or subsystem level.

A network is comprised of all assets that provide a particular type of service for a our government, ande.g. a subsystem consists of all assets that make up a portion or segment of a network.  For example, DOT could define the State’s transportation system as a network and the roads and bridges as two subsystems of the network.  DOT could also consider the roads and bridges to be two networks, with interstate highways, state highways, and rural roads as subsystems of the road network.

The following criteria is used to determine whether aA network or subsystem of roads and bridges is considered a major general infrastructure asset if either of the following is true:

a.  The cost or estimated cost of the network is expected to be at least $240,681,900[4], or

b.  The cost or estimated cost of the subsystem is expected to be at least $120,340,950[5].

DOT are only required to must report roads and bridges acquired on or before June  30,  2001, or earlier, only if the cost of the network or subsystem as defined by your agency exceeds the above dollar amounts.  GASB 34 encourages but does not require reporting of non-major networks.  Generally, these rules will require that a state’s network(s) of roads and bridges be reported as major general infrastructure assets.

TRANSITION PERIOD FOR REPORTING ROADS AND BRIDGES ACQUIRED ON OR BEFORE JUNE  30,  2001

GASB 34 includes a provision that allows governments to postpone the required reporting of major general infrastructure assets acquired on or before June 30, 2001.  The State may postpone reporting these major general infrastructure assets acquired on or before June 30, 2001, until the fiscal year ending June 30, 2006[6]; however, this postponement is discouraged by both GASB 34 and the Comptroller General’s Office.  A similar provision does not exist for reporting the debt associated with constructed infrastructure assets.  Therefore, the Comptroller General’s Office would prefer to record infrastructure assets on the State’s financial statements to offset the related debt that will be reported.  The State will be required to describe in the notes to the financial statements those infrastructure assets that are not being reported if the State chooses to delay the reporting of major general infrastructure assets past the fiscal year ending June 30, 2002[7].

REPORTING ROADS AND BRIDGES ACQUIRED ON OR AFTER JULY  1,  2001, OR LATER

All infrastructure assets purchased by governmental funds on or after July  1,  2001, or later, are required to must be reported in a the separate infrastructure category of depreciable capital assets and depreciated if the cost of the asset exceeds the $500,000 capitalization limit for infrastructure.

DEPRECIATION OF ROADS AND BRIDGES

The State’s roads and bridges should be depreciated using the straight-line method over a 75-year useful life unless the DOT proposes another useful life based on historical data.  The Comptroller General’s Office recommends that the DOT take a full year of depreciation in the year of acquisition and take no depreciation in the year of disposition.  However, the DOT may use a different straight-line convention (such as the mid-month convention) if it has a valid reason to do so.

MAINTENANCE OF INFRASTRUCTURE RECORDS

The Department of Transportation is required to maintain complete auditable records of all infrastructure assets in a level of detail that allows for accurate reporting of these assets.  Infrastructure records should include such information as acquisition date, historical or estimated historical cost, a policy for distinguishing between capitalizable costs and repair/maintenance costs, and an estimated useful life for costs determined to be capitalizable.

QUESTIONS?

Please contact Betsy Lawson by telephone at (803) 734-2617 or by e‑mail at blawson@cg.state.sc.us if you have any questions regarding the policies contained in this memo.  Thank you.

 

BCH:bg

 

 



[1] If the State Infrastructure Bank owns any roads or bridges, theprinciples set forth in this memorandum would also apply to that agency.

[2]
See Question 286 of GASB 34 Implementation Guide.

[3]
See Paragraph 148 of GASB 34.

[4] Amount equals 10 percent of the total cost of all general capital assets reported in the first fiscal year ending after June 15, 1999, which for the State of South Carolina was $2,406,819,000 as reported in its Comprehensive Annual Financial Report for the fiscal year ended June 30, 1999.  See Paragraph 156 of GASB 34.

[5] Amount equals 5 percent of the total cost of all general capital assets reported in the first fiscal year ending after June 15, 1999, which for the State of South Carolina was $2,406,819,000 as reported in its Comprehensive Annual Financial Report for the fiscal year ended June 30, 1999.  See Paragraph 156 of GASB 34.

[6] See Paragraph 148 of GASB 34.
[7] See Paragraph 151 of GASB 34.