NOAA Real Property Conference

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(No Transcript)
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Purpose

• Public Accountability
• The Chief Financial Officers (CFO) Act of 1990
  required each executive branch agency to prepare
  annual financial statements.
• The Federal Accounting Standards Advisory Board
  (FASAB) Statement of Federal Financial Accounting
  Standards (SFFAS) provides the guidance under
  which assets for the financial statements are
  reported.

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Definition

• CWIP is a temporary holding account used to track
  costs during the design and construction of
  Property, Plant and Equipment (PPE) that will
  eventually be capitalized and depreciated in
  NOAAs financial statements. The costs remain in
  this account until the PPE has been
  constructively delivered and accepted by NOAA.

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CWIP Determination

• At the planning phase of a Real Property project,
  determination must be made about whether or not a
  project is expected to be capitalized.
• Determinations are ultimately made by the Real
  Property office if there is any question.

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CWIP Determination

• A construction project must meet all of the
  following four criteria for capitalization
• have an aggregate acquisition cost of 200,000 or
  more
• have an estimated service life of 2 years or
  more
• provide a long-term future economic benefit to
  the NOAA organization which maintains or obtains
  control and
• is not intended for sale in the ordinary course
  of operations.

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CWIP Determination

• A project that extends the useful life of an
  asset is considered a capital improvement and
  will be capitalized.
• Capital improvements to existing assets must be
  treated as a CWIP activity.

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CWIP Determination

• Additions, alterations, betterments,
  rehabilitations or replacements that meet the
  capitalization criteria, change the functionality
  of the asset, or extend the useful life of the
  asset, shall be treated as a CWIP project.
• Determinations are ultimately made by the Real
  Property office if there is any question.

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CWIP Determination

• A CWIP Determination Letter (Exhibit A) is
  prepared and placed in the project file if the
  project meets all four of the CWIP determination
  criteria. Implemented by the CWIP Project
  Manager to document the determination process.

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CWIP Determination

• Completion of the letter takes place before any
  funds are obligated
• Communication between the PPMD, CWIP Project
  Manager and/or CWIP Activity Manager and RPMD
  prevents time-consuming corrections or
  reconstruction of relevant costs at a later time

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CWIP Determination

• Opportunities presented by the CWIP Determination
  letter
• Should the project be capitalized?
• Is it real or personal property?
• Where is the project located?
• What type of construction will be used? Useful
  life?
• Is a building being demolished?

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CWIP Discussion and Consideration for Capital
Costs

• CWIP capitalized costs are usually nonrecurring.

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Discussion and Considerations for Capital Costs

• Examples of capitalized costs
• Amounts paid to vendors
• Transportation charges to the point of initial
  use
• Labor and other direct or incidental production
  costs (for assets produced or constructed)
• Engineering, architectural, and other outside
  services for designs, plans, specifications, and
  surveys
• Acquisition and preparation costs of buildings
  and other facilities
• An appropriate share of the cost of the equipment
  and facilities used in construction work

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Discussion and Consideration of Capitalized Costs

• (continued)
• Fixed equipment and related installation costs
  required for activities, a building or facility
• Direct costs of inspection, supervision, and
  administration of construction contracts and
  construction work
• Legal and recording fees and damage claims
• Handling and storage costs
• Material amounts of interest costs paid (interest
  costs refers to any interest paid by the
  reporting entity directly to providers of goods
  or services related to the acquisition or
  construction of PPE) and
• Demolition of an existing building or structure
  to prepare a site for construction of a new
  building, structure or addition.

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Expensed Costs

• Specific examples of costs not included in CWIP
  for capitalization but instead to be recorded as
  an expense include
• Planning activities, to include economic/cost
  benefit analyses, National Environmental Policy
  Act (NEPA) activities, programming studies,
  conceptual space layouts and designs, surveys
  prior to initiation of final design, concept
  studies, risk management studies, etc.
• Ordinary administrative supplies (i.e., copy
  paper, office equipment, etc.)

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Expensed Costs

• (continued)
• Personal property equipment developed as
  prototypes "leading to development of
  specification" that will be used for
  purchase/production - these are "pre-design"
  costs
• Demolition of Federal government-owned Real
  Property, for reasons other than those mentioned
  in the discussion of capitalized costs, would be
  expensed and Personal property equipment
  constructed for Research and
• Development that is intended as experimental,
  changing product rather than as a finished
  product and, personal property equipment used
  for administrative support.

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Documentation ProcessFile Documentation

• The CWIP file should contain adequate supporting
  documentation for proper cost valuation of the
  asset. The asset value is entered into the PPE
  portion of the general ledger and is the amount
  entered into Federal RPM. Source documents for
  those costs should include, but is not limited
  to
• Copies of construction or production contract and
  all modifications and related invoices
• Copies of travel vouchers for inspections or
  design review
• Copies of A/E contract task orders and related
  invoices
• Bills of Lading for transportation charges
• SLT for Incidental Costs
• Copies of the CAMS CWIP Task Status Report
  (CA500D Report)

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Documentation ProcessFile Documentation

• 7) Copies of contracts for construction
  management services and related invoices
• Copies of billing for space charges for storage
  costs
• Copies of invoices for duplicating 100 design
  drawings and specifications for final design
• Copies of purchase orders, receipt and inspection
  reports and related invoices for materials
  purchased for in-house construction and
• CWIP spreadsheet or planning document as a cost
  and documentation checklist.

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Documentation ProcessTransferring Property from
CWIP to PPE

• Property, Plant and Equipment (PPE) shall be
  recognized when title passes to the acquiring
  entity. For Real Property this is when the
  Beneficial Occupancy Date (BOD) is established.
  The BOD shall be used as the acquisition date
  for purposes of depreciation.

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DocumentationReport of Property Constructed
(NF37-6)

• When a CWIP Project has reached Beneficial
  Occupancy, Acceptance or Delivery the following
  occurs
• Activity manager completes a Report of Property
  Constructed form (NF37-6) that includes all
  capitalized CWIP costs (Exhibit B)
• Activity manager submits the completed NF37-6 to
  the Financial Statements Branch (FSB) for
  approval
• After FSB approval, the NF37-6 is forwarded to
  the appropriate Real Property Office for their
  approval. Finance instructs the activity manager
  to release the asset file to Real Property

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Report of Property Constructed (NF 37-6)

• The Regional Real Property Office staff will
  review the NF 37-6, and related file
  documentation, for completeness and accuracy.
  Incomplete files will be returned to the CWIP
  Activity Manager for correction. Once approved,
  the Property Office will sign the NF 37-6 and
  enter the asset cost into Federal RPM
• The Real Property office will send the signed NF
  37-6 to the CWIP Activity Manager and send an
  email to both the Activity Manager and FSB
  informing them that the Property Office records
  have been updated for the amount of the NF 37-6
• FSB will move the costs to the General Ledger and
  capitalize the PPE and
• Activity Manager places the signed 37-6 in the
  file.

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RECAP - CWIP File Needs

• CWIP Determination Letter
• Copies of all CWIP obligating documents and
  payment documents
• SLT for incidental costs
• CA500D Report to document labor costs
• BOD Letter
• Report of Property Constructed (NF37-6)
• Activity Manager project spreadsheets
• Reconciliation spreadsheets

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RECAP CWIP File Needs

• Is there information Real Property needs that is
  not part of normal file?
• Square footage
• .jpg photo
• Address

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Useful Webpage Links

• Budget CWIP Homepage http//www.corporateservice
  s.noaa.gov/finance/CWIP.html
• CWIP Policy and Procedures Manual
  https//inside.noaa.gov/noaa/Budget___Planning/cwi
  p
• Project Planning and Management CWIP Home Page -
  http//www.corporateservices.noaa.gov/rpflo/PPMD/
  services.html
• Real Property CWIP Process Document (user
  friendly document that steps your through all
  processes of CWIP)
• http//www.corporateservices.noaa.gov/rpflo/fld_
  index_files/!!!Process20Document20for20CWIP20-
  20Real20Property20-20NOAA.doc