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GASB 34 Infrastructure Valuation Workshop

GASB 34 Infrastructure Valuation Workshop. What We Have Learned One Year Later. GFOAz 39th Annual Conference Presented by: Chuck Crandall, Berryman & Henigar Dan Leahy, City of Peoria. Survey. Who has implemented GASB Stmt #34?. Survey. Who has implemented GASB Stmt #34?

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GASB 34 Infrastructure Valuation Workshop

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  1. GASB 34 Infrastructure Valuation Workshop What We Have Learned One Year Later GFOAz 39th Annual Conference Presented by: Chuck Crandall, Berryman & Henigar Dan Leahy, City of Peoria

  2. Survey • Who has implemented GASB Stmt #34?

  3. Survey • Who has implemented GASB Stmt #34? • Retroactive infrastructure?

  4. Survey • Who has implemented GASB Stmt#34? • Retroactive infrastructure? • How many are Phase II entities?

  5. Survey • Who has implemented GASB Stmt#34? • Retroactive infrastructure? • How many are Phase II entities? • How many are Phase III entities?

  6. Overview • Brief review of GASB Stmt #34 requirements • Implementation options • Depreciation or Modified? • Tips • Resources

  7. No matter what your opinion of Capital Asset reporting It is GAAP You shouldn’t just ignore it Isn’t just infrastructure - all capital assets Capital Asset Reporting

  8. What is Infrastructure? • Long-lived capital assets that normally are stationary in nature and normally can preserved for a significantly greater number of years than most capital assets

  9. Roads Bridges Tunnels (in AZ??) Drainage systems Water systems Wastewater systems Dams Lighting systems Buildings are generally not infrastructure Examples of Infrastructure

  10. Network - All assets that provide a type of service Water Distribution System Wastewater Collection System Road System Subsystem - Assets that make up a portion of a network Wells, pumping stations, tanks, lines Pumping stations, transmission lines Pavement, signals, signage, lighting Networks/Subsystems

  11. Networks/Subsystems • Networks and subsystems may consist of dissimilar assets • Networks and subsystems are determined by grouping that best suit the governmental entity

  12. Application • ALL 80,000 + Governments (not federal) • All major infrastructure • 10% rule for networks and 5% rule for subsystems • Year Ends 2002, 2003, 2004 • Retroactive Assets

  13. What Really Needs to be Done This Year? • $10 Revenue or Less: Nothing • >$10 million and above in Revenue: This Year’s New Infrastructure • Over $100 million should have reported last year as well.

  14. Decisions • What infrastructure do you need to capture? • Records available? • Retroactive now or later? • In house or consultants? • Methodology?

  15. Decisions - Methodology • Financial records • Capitalize annual expenditures • Donated assets? • Current inventory • PMS • GIS • Dept records • Physical inventory

  16. Decisions • Network and Subsystems? • Pre 1980 Assets? • Reporting Approach

  17. Creative Compliance: What records are needed? • Asset Quantity - No inventory of sidewalks, curb & gutter, medians • Historical costs - No construction dates for pavement • Replacement Valuation: Complex Structures

  18. Reporting Approach:One year later • Depreciation Reporting Approach • Modified (Asset Management) Reporting Approach

  19. Depreciation Approach • Simple reporting approach • Minimal changes in records

  20. Modified ApproachOnly two of over 25 cities are using this approach. • Requires city management commitment • Multi-year plan • Asset management tools

  21. To Modify or Not to Modify • Advantages • Higher B/S values • Increased awareness of infrastructure maintenance • Maintained infrastructure is perpetual asset

  22. To Modify or Not to Modify • Disadvantages • Committing budget $ • Time & effort • Initial • Ongoing • Disclosure requirements

  23. Land ValuationEasements & ROW are required to be valued. • Land within the right-of-way needs to be valued as a non-depreciable asset. • Estimated fair market value at time of acquisition

  24. Future Infrastructure TrackingHow will we track additions & deletions? • No big deal? • Capital threshold • Dedicated assets • Large in-house projects

  25. Future InfrastructureWhat to Do? • Write procedures • Bond estimates • Council acceptance • Public works standard costs • Manage at least quarterly • Use a simple infrastructure tracking system

  26. Resources • GFOA • gfoa.org • GASB • gasb.org • krschermann@gasb.org • California Finance Officers • csmfo.org • Chuck Crandall (858-451-6100) • crandall@bhinc.com • Dan Leahy (623-773-7023) • daniell@peoria.com

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