HomeMy WebLinkAboutFND-022-09~,,~1~11 ~r^
Energizing Ontario REPORT
FINANCE DEPARTMENT
Meeting: GENERAL',PURPOSERND ADMINISTRATION COMMITTEE
Date: Monday September 14th, 2009 Resolution #: ~~~ _~~~o~
Report #: FND-022-Q9 File #: By-law #:
Subject: PSAB 3150 TANGIBLE CAPITAL ASSETS UPDATE
Recommendations:
It is respectfully recommended that the General Purpose and Administration Committee
recommend to Council the following:
1. THAT Report FND-022-09 be received for information.
~~_ ~~_~
Submitted by: ~ Reviewed b .
ancy T~+ lor,~ ., C.A., Franklin Wu,
Director of Finance/Treasurer Chief Administrative Officer.
NT/CC/cd
REPORT NO.: FND-0221,-09 PAGE 2
BACKGROUND AND COMMENT:
1.0 Revisions to Section PS 3150 of the Public Sector Accounting Handbook for the
accounting of tangible capital assets for local governments were approved by the
Public Sector Accounting Board (PSAB) of the Canadian Institute of Chartered
Accountants (CICA) in June 2006. The purpose was to establish standards for
the accounting trgatment of tangible capital assets acquired by local
governments. All'municipal governments are required to be in compliance with
this recommendagion as of January 1, 2009 for the reporting on the fiscal 2009
financial statements. Also, municipalities wilt be required to provide comparison
figures for 2008.
Discussion
2.0 The change to full accrual accounting for tangible capital assets is one of the
most significant changes to municipal accounting in many years. Each
municipality is required to inventory all tangible capital assets, determine the
historical value and amortize each asset over its useful life. Amortizing tangible
capital assets allocates the cost over their useful lives. All capital assets that
meet the chosen thresholds, whether purchased, donated, transferred from other
levels of government or transferred ownership from new subdivisions, must be
included. If the historical cost cannot be found, other methods are employed
such as using appraisals or the replacement cost deflated back to the year of
acquisition. Once' completed, an external audit of the beginning balances of
tangible capital assets is required.
2.1 Considering that irn 2005, local governments owned 67% of all public assets in
Ontario, this is a n!ionumental task. In August 2009, an informal survey done by
Ontario Good Roads Association (OGRA) indicated that the majority of
municipalities in q'ntario were less that 50% complete in meeting PSAB 3150
compliance and fewer than 5% had completed the project.
2.2 The Municipality Of Clarington has proposed the following asset
classes/categories:
^ Land -land under roads, sidewalks and buildings, park land, vacant land,
cemeteries
• Site Amenities - parks, trails, playing fields, parking lots
^ Buildings - broken'down into components such as structure, interior, mechanical,
roof and other
^ Infrastructure -roads, bridges & culverts, storm sewers, street lights, sidewalks,
and guide rails
• Machinery and Equipment -playground, firefighting, telephone, other
• Vehicles -licensed vehicles, non-licensed vehicles, fire vehicles
REPORT NO.: FND-022x09 PAGE 3
^ Materials -library collections
^ Furniture and Fixtures -including library shelving
^ Computer systems -hardware and software
Note that historical treasures, works of art and costs of studies such as the
Official Plan are not considered a tangible capital asset.
2.3 Currently each department has an understanding of the assets for which they are
responsible. However, there is no standardization of the information and the
capital assets are not shown on the current financial system. As a result, the
scope and completeness of the information may greatly vary from one source to
another. Some assets, such as the fleet, are relatively straight forward. In other
asset groups, such as pavement management, the data is quite extensive
(although not complete for accounting purposes) as the pavement has been
through several life cycles. The required bi-annual bridge condition report has
provided valuable information. Also, within the last year an updated inventory of
the storm sewers and guide rails have been conducted to add to the municipal
database. Due to the time constraints and the technical information required,
AECOM (formerly TSH) has assisted with the inventory and historical valuation of
various capital assets such as roads, bridges and culverts, guide rails, sidewalks,
and storm sewer networks. Other sources of information such as insurance
valuations are being used for buildings and MPAC data for land values.
2.4 Despite a few setbacks, there has been steady progress in the collection of asset
information. A fever asset classes are close to completion but there is still a great
deal of work remaining. Department staff continue to be helpful in compiling data
and clarifying the available information.
2.5 An extension of the PSAB 3150 project is that the information collected can be
used to lead into Ipng-term asset management. With a comprehensive list of
capital assets, their accumulated depreciation, remaining useful life and general
condition rating, wie will be better able to plan capital replacement, acquisitions
and long-term financing strategies for the future.
Conclusion
3.0 This report is provided as information to Council. Further reports will be provided -
as the project moves forward. -
CORPORATION OF THE MUNICIPALITY OF CLARINGTON
40 TEMPERANCE STRE T, BOWMANVILLE, ONTARIO L1C 3A6 T (905)623-3379 F (905)623-4169