Yorkton Council unanimously approved a Tangible Assets Capital Assets Policy at its regular meeting Monday.
"The Tangible Capital Assets policy has been created to account for City assets in conjunction with Public Sector Accounting Board (PSAB) standards," explained a report by Lonnie Kaal, Director of Finance with the City.
In creating the policy Kaal said the City had to establish the criteria of what are capital assets.
Yorkton will not treat purchases as capital assets or additions unless:
*The value is at least $10,000 and,
*The cost is a betterment to an asset where at least one of the following is evident;
*an extension of the estimated useful life
*an increase in physical output or service capacity
*a reduction of operating costs (i.e. efficiency)
*an improvement in quality of output
"This does not mean that we will not track all purchases and manage items that are less than $10,000, but rather, that these items will be expensed rather than capitalized and depreciated over time," detailed the report.
"For instance, computers would typically be expensed as the cost is less than $10,000. The cost would be included in the operating budget in the year that they are purchased similar to the way we handle these purchases now.
"Conversely, the backbone of the computer/network system would be capitalized as the value is greater than $10,000 and has a useful life of at least five years."
While the new Policy will be a new tool, Kaal's report noted it will not change current budgeting.
"All of these changes in accounting will not change how we budget. Both the operations and capital expenditures will need to be funded and budgeting is required to make sure this happens. What the new reporting of fixed assets will do is provide information regarding what we own together with a historic cost. Then we will move towards managing these assets based on condition and other factors.
"The attached Policy is required to account for fixed assets in a way that is acceptable for the public sector. All departments were involved in comparing useful lives of various different asset classes to those in the provincial template. The majority are similar with a few changes made to suit our circumstances.
"The intent is to start our asset register effective Dec. 31, 2010 and move towards asset management in the upcoming year. Amendments to the policy may be required as we move forward and any significant changes would require Council approval whereas changes to the schedules would not."
