Implementation of Tangible Capital Asset TCA Reporting

1
Implementation of Tangible Capital Asset (TCA)
Reporting

• TPFR Information Sessions
• Fall 2007

2
Topics to be discussed

• Why What?
• Relevant PSAB Handbook Section Guideline
• When?
• Timelines
• Where weve been and where were going ?
• Background Steps Taken to Date
• Next Steps

3
PSAB Handbook Section Guideline

• PS 3150 - Tangible Capital Assets
• Handbook section approved September 2006
• Applies to all levels of governments
• Applicable for fiscal years starting on or after
  Jan. 1, 2009
• Includes the following
• definitions of TCA
• how to account for them
• how to measure and amortize them
• when to write them down and how to dispose of
  them
• presentation and disclosure requirements
• transitional provisions for local governments

4
PSAB Handbook Section Guideline

• PSG-7 Tangible Capital Assets for Local
  Governments
• Provide transitional guidance on presenting
  information in notes or schedules to your
  summarized financial statements
• Applicable for fiscal years starting on or after
  January 1, 2007 2007/08 school year
• Disclose information by major asset category
• Disclose information that you have, as well as
  excluded categories

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Implementation Timeframe

• 2006/07 No implementation requirements
• 2007/08 Note disclosure requirements
• Using March 2008 data
• 2008/09 Full Implementation requirements
• In order to have the information available for
  the government fiscal year April 2009 March
  2010

Early
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Whats been done Where weve been

• Jan - Apr 2005
• Prepared a valuation methodology for land and
  building assets
• Received acceptance from the OAGO in April 05
• Capital Asset Valuation Proposal is on the TPFR
  website
• May 2005
• Hired ORC to assist in gathering and preparing
  input data for the Book Value Calculator (BVC)
  application tool
• Created the CAPEdu website tool for board data
  entry

7
Whats been done Where weve been

• June October 2005
• Created an Excel template
• Collected first round of TCA data from DSBs
• For land building assets owned as of March 31,
  2005
• Data was verified then dumped into CAPEdu
• June 2005
• ICAO Meeting Proposals relating to
  consolidation
• Book Value Calculator Specified Procedures
• September 2005
• First collection of 5-month capital activities
  report
• (April - Aug 05)
• Specified procedure reports on this data

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Whats been done Where weve been

• Oct 2005
• ICAO Meeting Update on consolidation issues
• Oct 2005 - March 2006
• Boards entered historical cost information in
  CAPEdu
• (if available)
• Other information where cost was not available
• Portable structures module - year and size only
• Boards locked data as confirmation process
• ORC Appraisers valued buildings and land
• Input information into BVC
• Dec 2005
• Interim review of input data by OAGO

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Whats been done... Where weve been

• March 2006
• First collection of 7-month capital activities
  report (Sep 05 - Mar 06)
• Specified procedures reports on this data
• May 2006
• Prepared capital entries for Public Accounts of
  Ontario
• May June 2006
• OAGO Audit
• October 2006
• Issued 1st draft Tangible Capital Assets Guide
  for discussion

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Whats been done ... Where weve been

• January 2007
• ICAO Meeting Discussion of draft TCA Guide and
  Implementation Issues
• Issue 2nd Draft TCA Guide
• March 2007
• Information session for DSBs
• TCA Implementation Issues and Systems
• September 2007
• Issued Final TCA Guide
• Re-opened CAPEdu website (view only)
• http//204.40.6.15/CAP-Edu
• Previous logins still active hit Forgot
  Password
• New logins email Sangita.Barman_at_ontario.ca

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Overview of TCA Guide

• School Board and School Authorities Tangible
  Capital Assets
• Accounting Policies and Implementation Guide
• TCA Classes
• Established different classes
• Whats included in each class
• Capitalization threshold for each class
• Useful life of each class
• Method of reporting each class
• How to Deal with Changes to Useful Life
• TCA Management Internal Controls
• Available on TPFR site
• http//tpfr.edu.gov.on.ca/Reporting_Entity_PolicyD
  ocuments.htm

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Pooling of Assets

• Similar capital assets are grouped in one
  tangible capital asset class
• No individual tracking of each tangible capital
  asset in the class
• Assets remain in the asset class until it is
  fully amortized
• - no actual disposals, deemed disposals
• No significant advantage of tracking the
  assets on an individual basis - balance would not
  be materially different

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Accounting for TCA Classes

• Non-Pooled
• Buildings (40 yrs)
• Other Buildings (20 yrs)
• Land Land Improvements with Infinite Lives
  (nil)
• Land Improvements with Finite Lives (15 yrs)
• Equipment (15 yrs)
• Vehicles lt 1 ton (5 yrs)
• Vehicles or gt 1 ton (10 yrs)

• Pooled
• Portable Structures (20 yrs)
• Furniture (10 yrs)
• Equipment (5 yrs)
• Equipment (10 yrs)
• Computer Hardware (5 yrs)
• Computer Software (5 yrs)

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Capitalization Thresholds

• Buildings (3 classes) 10,000
• Land 10,000
• Land Improvements 10,000
• Furniture 5,000
• Equipment (5 yrs) 5,000
• Equipment (10 yrs) 5,000
• Equipment (15 yrs) 5,000
• Vehicles (2 classes) 5,000
• Computer Hardware 5,000
• Computer Software 5,000
• Capitalize all upon initial purchase
• Threshold doesnt apply to first-time school
  equipping
• Or if bulk purchase order exceeds 25,000

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Data Flow Summary
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Next StepsMinistry of Education

• Sep - Oct 2007
• Post March 05 - March 07 Data for Boards via EFIS
  Reporting portal (data flow summary)
• Distribute suggested accounts to use for TCA
• Develop process to run BVC for missed assets or
  major errors.
• Post supporting documentation on TPFR site
• TCA Valuation Methodology
• Support letter from OAGO
• BVC documentation
• Etc

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Next Steps.District school boards

• Oct 2007 - Aug 2009
• Establish opening balances for other asset
  classes
• Prepare supporting documentation for external
  auditors to validate opening land building
  asset classes
• Aug 2008
• Boards report TCA data on land buildings in
  their notes to their financial statements
• Aug 2009
• Full TCA reporting on DSB Financial Statements!!!

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Next Steps.External Auditors

• Oct 2007 - Aug 2009
• Audit the estimated opening values for land
  buildings
• Using provincial data from the BVC and Capital
  Activity Reports submitted between Mar 2005 and
  March 2007
• Audit the estimated opening values for other
  asset classes
• Using valuation methodologies as discussed with
  the DSB

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Questions

• ??????????