M E M O R A N D U M
Robin Wilkes, Debra White, Angela Feaster, and Carl Chase; Department of Transportation[1] |
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FROM: |
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DATE: |
June 8, 2001 |
SUBJECT: |
GASB 34—-Infrastructure
Reporting Policies |
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:
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.
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].
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.
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.
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.
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
[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.