Asset and Risk Management
This chapter reviews the asset and risk management function of Venus Independent School District (VISD) in the following sections:
C. FIXED ASSETS
TEA defines fixed assets as items a district has purchased or had donated that are tangible in nature; have a useful life longer than one year; are worth $5,000 or more; and may be reasonably identified and controlled through a physical inventory system. FASRG requires assets that cost $5,000 or more to be capitalized. Items that cost less than $5,000 are recorded as an operating expense of the appropriate fund under TEA guidelines. These guidelines also allow school districts to establish lower thresholds for control and accountability of equipment that costs less than $5,000. For example, computer and audiovisual equipment that costs less than $5,000 and do not have to be capitalized.
Many districts say items worth less than $5,000 should be tracked on a control log and inventoried annually. This means:
- tagging all valued assets when they are received using a bar code system;
- using accounting codes to track capitalized fixed assets as well as expensed assets;
- inventorying all assets on an annual basis;
- using the annual inventory results to set insurance rates; and
- identifying decreases in inventory and tightening controls when necessary.
The Comptroller’s Top 10 Ways to Improve Public Schools report provides districts with a description of fixed assets, reasons to keep accurate accounting records and explains why all valuable items should be maintained on a control log and inventoried annually. Fixed assets include all properties, vehicles, equipment and building contents. Districts should track and reconcile additions and deletions to property in the inventory. Additional reasons districts need to track fixed assets include:
- properly kept fixed asset records furnish taxpayers with information about district investments and contrast them with expenditures;
- fixed asset records provide the basis for adequate insurance coverage;
- systematic physical inventories of fixed assets allow the district to survey the physical condition of its assets and assess the need for repair, maintenance or replacement;
- periodic inventories establish a system of accountability for custody of individual items;
- for budgeting, reliable information about fixed assets can help determine future requirements; and
- periodic inventories identify lost or stolen items so that insurance claims can be filed, additional controls can be instituted and accounting records can be adjusted to reflect the losses.
The Governmental Accounting Standards Board issued statement 34 (GASB 34), which establishes financial reporting standards for state and local governments. One element of the statement requires governments to report and depreciate capital assets. TEA required all districts to comply with GASB 34 for accounting periods beginning after June 15, 2001.
VISD policy CFBA (Local) defines capital assets as land, buildings, improvements other than buildings and furniture and equipment that:
- are not consumed as a result of use;
- have a useful life of at least one year and per unit cost of $5,000 or more;
- can be identified and reasonably accounted for through an inventory system; and
- are grouped or cataloged through library media or computer labs.
Inventory assets are defined as equipment that: are not consumed as a result of use; have a useful life of at least one year and per unit cost of at least $500 and not more than $4,999; and can be identified and reasonably accounted for through an inventory system.
VISD contracted with RCI Technologies, Inc. to provide a comprehensive fixed asset management program. On October 16, 2002, the contractor completed counting and bar coding all fixed assets with a value of more than $500 and installed a software system to track fixed assets. The business manager manages the program and maintains the inventory system. District personnel will complete the annual inventory starting with the 2003-04 school year. VISD procedures address all the requirements of GASB 34.