2000-05 Amending Title 3 Revenue/Finance - General Fixed AssetsKODIAK ISLAND BOROUGH
ORDINANCE NO. 2000 -05
Introduced by:
Requested by:
Drafted by:
Introduced:
Public Hearing:
Adopted:
AN ORDINANCE OF THE KODIAK ISLAND BOROUGH ASSEMBLY AMENDING
TITLE 3 REVENUE AND FINANCE
CHAPTER 3.04 PUBLIC FINANCE- - MANAGEMENT AND ACCOUNTING
SECTION 3.04.057 GENERAL FIXED ASSETS
TO ESTABLISH CAPITALIZATION THRESHOLDS FOR FIXED ASSETS
Manager Jensen
Finance Director
Finance Director
05/04/2000
05/16/2000
05/16/2000
WHEREAS, the Government Finance Officers Association (GFOA) of the United States and
Canada is a professional organization of public officials united to enhance and promote the
professional management of governmental financial resources by identifying, developing, and
advancing fiscal strategies, policies, and practices for the public benefit; and
WHEREAS, an important part of the efforts of the GFOA has been systematic identification of
"best practices" in the state and local government finance profession as envisioned by the GFOA
Executive Board. The GFOA has undertaken the formulation of a comprehensive framework of
recommended practices for each of the functional areas of public finance; and
WHEREAS, the Recommended Practices for State and Local Governments, March 2000
publication represents official GFOA positions that have been developed by the GFOA Standing
Committees and have been approved by the GFOA Executive Board; and
WHEREAS, the Government Accounting Standards Board (GASB) Statement No. 34
implemented the new financial reporting model for governments with total revenues of ten million
dollars or more, but less than one hundred million dollars, starting with the fiscal year ending June
30, 2003; and
WHEREAS, the GFOA recommends that state and local governments consider the following
guidelines in establishing capitalization thresholds for fixed assents: 1) fixed assets should be
capitalized only if they have an estimated useful life of at least two years following the date of
acquisition; 2) fixed assets' capitalization threshold should be applied to individual fixed assets
rather than to groups of fixed assets (e.g., desks and tables); 3) as a general rule capitalization
thresholds should be designed to encompass approximately eighty percent of a government's
total non - infrastructure assets. (Infrastructure assets are assets that are immovable and of value
only to the government); 4) in no case should a government establish a capitalization threshold
of Tess than one thousand dollars for any individual item; 5) in establishing capitalization
thresholds, governments that are recipients of federal awards should be aware of federal
requirements that prevent the use of capitalization thresholds in excess of certain specified
maximum amounts (i.e., currently five thousand dollars) for purposes of federal reimbursement;
and 6) governments should exercise control over their non - capitalized fixed assets by establishing
and maintaining adequate control procedures at the department level; and
WHEREAS, GASB No. 34 requires that all capital assets, including general infrastructure assets
(e.g., roads, bridges, and culverts) be capitalized in the financial statements at their historical cost
or estimated historical cost; and
Kodiak Island Borough, Alaska Ordinance No. 2000 -05
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WHEREAS, the Kodiak Island Borough Finance Department recommends that the Borough
Assembly adopt these recommendations;
NOW, THEREFORE, BE IT ORDAINED BY THE ASSEMBLY OF THE KODIAK ISLAND BOROUGH
THAT:
Section 1: This ordinance is of a general and permanent nature and shall become a part of the
Kodiak Island Borough Code of Ordinances.
Section 2: Section 3.04.057 General fixed assets of the Kodiak Island Borough Code of
Ordinances is amended to read as follows:
-74
Judith A. Niel n, CMC, Borough Clerk
Chapter 3.04
PUBLIC FINANCE -- MANAGEMENT AND ACCOUNTING
3.04.057 General fixed assets. General fixed assets of the borough shall be valued in
accordance with generally accepted accounting principles (GAAP).
A. Land valuation. Generally land shall be valued at cost. If cost is not known, then land will
be valued at fair market value at date of acquisition. Land acquired through foreclosure or default
on land sale payments will be valued at fair market value at date of foreclosure or default.
Donated land will be valued at fair market value at date of acquisition.
B. Buildings and improvement valuation. All buildings and structures shall be valued at cost
or cost of construction. If cost is not known then building and improvements will be valued at
fair market value at date of acquisition. Donated buildings and improvements will be valued at
fair market value at date of acquisition.
C. Other fixed assets. Other fixed assets are those fixed assets (property, plant, and
equipment) of the borough defined as tangible assets with a useful life in excess of one (1) two
(2) years, an initial cost of five hundred thousand (5,000) dollars, and those items that do not
lose their identity when used with or applied to another asset.
D. Exceptions prior to the fiscal year ending June 30, 2003. No road, bridge, culvert, viaduct,
or other such major asset will be capitalized. These public assets by virtue of their nature claim
a degree of immunity from pilferage, vandalism, and misappropriation. There shall be no
exceptions starting with the fiscal year beginning July 1, 2003.
ADOPTED BY THE ASSEMBLY OF THE KODIAK ISLAND BOROUGH
THIS SIXTEENTH DAY OF MAY, 2000.
Air j A
KO DI,PK ISIAND B OUGH
\
ry L. Stevens, Borough Mayor
Kodiak Island Borough, Alaska Ordinance No. 2000 -05
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