Table of Contents
- A. Cash and Investments
- B. Fixed Assets
- C. Workers' Compensation
- D. Records Management
CURRENT SITUATION
MPISD's fixed assets include its land, buildings, furniture, equipment, and vehicles. Accounting for fixed assets is the responsibility of the fixed assets clerk who reports to the business manager.
MPISD performs an annual physical inventory of its fixed assets. A list of assets at each school is printed by the fixed assets clerk and distributed to the schools for a physical count. The school principals or their designees are responsible for performing the physical count and reporting any differences to the clerk. Fixed assets that are obsolete and no longer of use to the district are moved to a warehouse and sold at auctions.
FINDING
TEA defines fixed assets as items that are tangible in nature; long-lived (with a life of longer than one year); of a significant value at the time of purchase or acquisition and reasonably identified and controlled through a physical inventory system. According to TEA, if a purchase meets these criteria and costs $5,000 or more the item is considered a fixed asset and should be capitalized. Districts are allowed to establish lower limits for capitalizing fixed assets if they see fit.
MPISD capitalizes as fixed assets items with a value of $500 or more and a useful life of at least one year. The district raised its capitalization limits in 1997 from $200 to $500. This change resulted in the deletion of numerous fixed assets from the district's records.
MPISD's fixed assets listing is voluminous and maintaining the list requires a significant amount of the clerk's time. The clerk spends at least one hour per day with these records and is behind in both updating the fixed assets records and in implementing a bar coding control system recently purchased by the district. A computerized list of fixed assets with costs greater than $2,000 contains significantly fewer items than the list of assets valued at $500 or more. Many districts prefer to keep the capitalization limits low so that computers and audio/visual equipment, which are more prone to theft, are captured in the system. Unfortunately, maintaining a lower limit also results in the system tracking chairs, tables, and desks that are not as prone to theft. Some districts have addressed this problem by stipulating that all items with a value of $5,000 are capitalized as are all computers and audio/visual equipment with a value over $100. Other districts have chosen to capitalize assets over $5,000 and maintain a separate control inventory of items susceptible to theft. Both lists are maintained but external auditors are only required to sample and test the capitalize assets.
Recommendation 47:
Increase the district's fixed asset capitalization policy amount to $5,000 and establish a control inventory of other high-theft items and all computer and telecommunications equipment.
The district's efforts to implement a bar coding control system would be much simpler and much less time consuming for the fixed assets clerk with a higher capitalization limit.
IMPLEMENTATION STRATEGIES AND TIMELINE
1. The business manager revises fixed asset capitalization policy to include those assets with costs of $5,000 or more and submits to Board of Trustees for approval. May 1999 2. The board reviews and approves the new capitalization policy. May 1999 3. The business manager revises procedures and makes necessary adjustment to the financial records. June - July 1999 4. The business manager begins operating under the new capitalization policy. Fiscal 1999 - 2000 FISCAL IMPACT
This recommendation can be implemented with existing resources.
