A2507-CAPITAL ASSETS - REDLINE.PDF

MARICOPA COUNTY INTERNAL POLICY
Policy Number: A2507
Policy Title: Current Adoption
CAPITAL ASSETS Date:
Current
Implementation Date:
Approved by: Board Agenda C-18-19-010-6-00
Number:
BOARD OF SUPERVISORS Original Adoption
Date: 04-06-2005
Maricopa County Policy Title:
CAPITAL ASSET POLICY
Policy Number:
CAPITAL ASSETS
A.Purpose
I. PURPOSE
The purpose of the Capital Asset Policy is to establish policiesprovide Maricopa County
Departments and procedures governingSpecial Districts a comprehensive guide to be utilized
in the definition, organization, and reporting of financial transactions for capital asset activities
for Elected Officials and employeesassets, capital improvement projects, and infrastructure
assets to ensure consistent management of all capital asset activity.
Specific information regarding Arizona Revised Statutes can be viewed at the following
Internet site: http://www.azleg.state.az.us/ArizonaRevisedStatutes.asp
This policy defines the overall responsibility for capital asset expenditures. Specific
information and detailed procedures are contained in the Capital Asset Manual, which is
located at https://mymc.maricopa.gov/204/Capital-Assets-Projects and Capital Improvement
Projects & Infrastructure Manual located on the Department of Finance MYMC site.
II. APPLICATION
This policy is a new comprehensive policy for applies to all Maricopa county
departmentsCounty appointed departments as well as the Flood Control District of Maricopa
County, the Maricopa County Library District, and the Maricopa County Stadium District

Maricopa County Policy Policy Number: A2507
A2507
Policy Title Capital Asset Policy:
CAPITAL ASSETS Revision: #Current
Adoption Date:
(Special Districts). The Board of Supervisors is authorized to jointly adopt policies applying to
the Special Districts under the Intergovernmental Agreement, C-06-18-393-6-00, approved
on April 11, 2018.
This policy also applies to employees of County elected offices unless the elected official has
implemented a similar policy specific to their office.
Therefore, all department/Special District policies regarding capital assets are revoked
except where noted.
B.Definitions
The following terms are used throughout the Capital Asset Policy (A2507):
III. DEFINITIONS
A. Acquisition: A newly acquired capital assetasset by purchase, annexation or donation.
B. Acquisition Costs: Costs incurred to purchase, construct, or develop a capital asset,
including ancillary costs and costs incurred to put the asset in its intended use (i.e., legal
and title fees, closing costs, appraisal and negotiation fees, land preparation costs,
demolition costs, taxes, and shipping/transportation charges).
C. Appointing Authority: An Elected Official, the single administrative or executive head of
a Department/Special District, or the designated representative authorized to act in this
capacity.
D. Betterment or Improvement: An increase in the value of ana capital asset due to an
improvement made to the asset. The valid entries are between 01 and 99. The original asset
acquisition will be assigned betterment number 00. , upgrade, and/or enhancement, that
increases future benefits, lengthens the estimated useful life, and/or increases the service
capacity of an existing capital asset beyond its previously assessed standard of
performance. A betterment must have a costmeet the capitalization threshold of $5,000.00
or more.
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Maricopa County Policy Policy Number: A2507
A2507
Policy Title Capital Asset Policy:
CAPITAL ASSETS Revision: #Current
Adoption Date:
E. Capital Asset: Assets of a relatively fixed or permanent nature owned by the County/Special
District.Capital Asset: Capital assets are tangible and intangible assets acquired for use
in operations that will benefit more than a single fiscal period. This includes: equipment,
machinery, and vehicles , infrastructure, and improvements other than buildings with an
estimated useful life of over one year costing more than $5,000.00, improvements other
than buildings exceeding $5,000.00 in costand an acquisition cost of $5,000 or more, and
all buildings and land parcels regardless of value. Upgrades and/or enhancements of
existing capital assetsasset are also considered a capital asset.
F. Capital Improvement Project: A major, non-recurring project related to an individual
capital improvement project, or to a program that is implemented through a Capital Project
Fund.
G. Capital Projects FundsFund: A fund whichthat accounts for the proceeds of bond issues
and other resources expended for the acquisition, construction or reconstruction of major
capital facilities. Capital Projects Funds’ purchases are accounted for in the Government
Wide Statement of Net Assets.
H. Capitalization Threshold: A dollar amount that determines if the item acquired should be
capitalized for the proper financial reporting and tracking of a capital asset. Maricopa
County’s capitalization threshold is $5,000 for equipment, machinery, vehicles,
infrastructure, and improvements other than buildings. Land and buildings are capitalized
regardless of value. Asset acquisition costs below this amount shall be expensed.
I. Construction in Progress: Capitalized costs related to a capital asset (i.e., a capital
improvement project) that is not yet substantially complete and placed into service.
Department: A Refers to the department is a specialized division within a large
organization. As an example, the Department of Finance, Environmental Services, and
Office of Management & Budget.
J. Department Head: The Elected Official, Presiding Judge,, office or Appointed Department
Director serving as the responsible party for conducting business on behalfagency under
budgetary responsibility of the Maricopa County/ Board of Supervisors or the Maricopa
County Special District.(s) Board of Director(s).
K. Depreciation: The allocation of the cost of property over its economic (useful) life.
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Maricopa County Policy Policy Number: A2507
A2507
Policy Title Capital Asset Policy:
CAPITAL ASSETS Revision: #Current
Adoption Date:
Depreciation Method: The method used to allocate the cost of property over its economic
(useful) life. The County/Special Districts use the Straight Line Method (SL) for all
depreciable assets.
L. Disposition: The process of eliminating an asset from the on-lineCGI Advantage financial
system due to sale, destruction, obsolescence, loss/theft, etc. This is the process is
initiated by the owner department. When a department disposes of an asset due to loss,
theft or damage, the responsible department must comply with Administrative Policy
A2230 Self Insured Property Coverage and Deductible Policy. See Capital Asset Manual
for a listing of valid Disposition codes. Department.
Disposition Authority: An additional field of information used to identify the method of
disposal. This will be the Auction Date, the Trade-in Date, the Journal Voucher Number (for
an Internal Sale), or any other relevant information about the asset disposal.
Disposition Method: A code identifying the way in which an asset was retired. See the
Capital Asset Manual for a complete listing of valid Disposition codes.
M. Elected Official: A person who is chosen by ballot to an office or post of authority by
eligible voters to represent them in a public capacity and perform the duties for which they
were elected.
Historical Value: The original cost of a capital asset. If the original cost of a capital asset is
unavailable, the estimated value is to be utilized.
Infrastructure Assets: Long-lived capital assets that normally are stationary in nature and
normally can be preserved for a significantly greater number of years than most capital
assets. Examples of infrastructure assets include roads, bridges, tunnels, drainage systems,
water and sewer systems, dams, and lighting systems.
N. Intangible Capital Asset: A nonfinancial asset that lacks physical substance and has an
initial useful life that extends beyond a single fiscal period (e.g., computer software,
patents).
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Maricopa County Policy Policy Number: A2507
A2507
Policy Title Capital Asset Policy:
CAPITAL ASSETS Revision: #Current
Adoption Date:
O. Salvage Value: The estimated amount that can be realized from the
dispositionDisposition of a retired asset at the end of its estimated useful life. Salvage
value for all County/Special District assets is zero.
P. Special District: Flood Control District of Maricopa County, Maricopa County Library
District, or Maricopa County Stadium District.
Q. Tangible Capital Asset: A capital asset with a physical form with a useful life greater
than one fiscal period.
R. Useful Life: The time period, in years, over which a capital asset is expected to remain
valuableprovide service to the County/Special District.
See the Capital Asset Manual for a complete list of valid useful lives of assets.
C.Policy
IV. POLICY
A. Each Department/Special District will designateassign a Capital Asset Manager
(SeeDesignee (see Section DV. for Responsibilities.).responsibilities).
B. The Department of Finance will utilize an on-linethe CGI Advantage online financial system
to capture and report the data associated with capital assets and expenditures. All capital
asset transactions (e.g., additions, deletions, transfers, etc.) must have appropriate
supporting documentation attached within CGI Advantage. Please see the Capital Asset
Manual for further clarification and instructions.
C.All items to be capitalized and entered into the on-lineCGI Advantage financial system
by the Department of FinanceDepartments must be expended out of a capital asset
object code. Amounts paid for non-capital items must be expended out of a non-
capital object code. For further clarification of the specific capital asset object
codes to utilize, please review the Capital Asset Manual.
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Maricopa County Policy Policy Number: A2507
A2507
Policy Title Capital Asset Policy:
CAPITAL ASSETS Revision: #Current
Adoption Date:
D.C. Amounts paid for items not considered general or medical supplies, that have a useful life
and the County Chart of one year or more but cost less than $5,000.00 per item will be
expended out of a non-capital equipment object code. For further clarification of the specific
non-capital equipment object code to utilize, please review the Capital Asset
Manual.Accounts.
E.D. C
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Maricopa County Policy Policy Number: A2507
A2507
Policy Title Capital Asset Policy:
CAPITAL ASSETS Revision: #Current
Adoption Date:
apital assets will be recorded at actual cost. at the date of acquisition. Actual cost includes
all charges necessary to place the item in its intended location and condition for use, such
as taxes, freight, title search fees and installation charges. The following capitalization
levels are utilized by the County/Special Districts:If the original cost of a capital asset is
unavailable, the estimated fair market value at the date of acquisition should be used to
value the asset. Assets that meet the capitalization criteria (useful life greater than one
year and meet the capitalization threshold) shall be capitalized and entered into the CGI
Advantage financial system. For further clarification, please review the Capital Asset
Manual and the Capital Improvement Projects & Infrastructure Manual. The following
asset classifications are utilized in the financial system.
1. Land Parcels
1. : All land parcels (regardless of value) including tracts and parcels of land, easements,
and rights-of-way, shall be capitalized and entered into the on-line financialCGI
Advantage system by the Department of Finance. . Land is capitalized at its original
purchase price plus any costs incurred to put the land in the condition necessary for
its intended use, such as legal fees and excavation costs. The items included in this
section are tracts and parcels of land, rights-of-way and easements owned by the
County/Special District. Please review the Capital Asset Manual for the correct object
code to utilize when purchasing land parcels. and title fees, relocation and excavation
costs.
2.Improvements Other Thanthan Buildings
2. Assets in this category that are equal to or exceed $5,000.00 in original cost :
All improvements with an acquisition cost of $5,000 or more and a useful life greater
than one year shall be capitalized and entered into the on-line financialCGI Advantage
system by the Department of Finance. The capitalized cost will be the actual dollar
cost of installation or acquisition of these assets at the date of acquisition, including
any fees for services related thereto. Items included in this section are:. Assets in this
category include land improvements, leasehold improvements, major technology and
network improvements, retaining walls, flagpoles, fences, gateways and surfacing
recreation areas such as tennis courts. Please review the Capital Asset Manual for
the correct object code to utilize when purchasing items associated with the
improvement to areas other than buildings. parking lots, landscaping, etc.
3.Buildings
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Maricopa County Policy Policy Number: A2507
A2507
Policy Title Capital Asset Policy:
CAPITAL ASSETS Revision: #Current
Adoption Date:
3. : All buildings (regardless of value) shall be capitalized and entered into the on-line
financial system by the Department of Finance. . The capitalized cost will include the
cost to build or the purchased cost at the time of acquisition, including architect and
engineer's fees, permits, insurance during construction, interest during construction
and other administrative (indirect) costs and appraisals. Costs such as Cost of land
acquisition and demolition areis not included as part of building costs. They are, but
should be included as costs of thea land as indicated above. Please review the Capital
Asset Manual for the correct object code to utilize when purchasing buildings.asset.
4.Machinery and Equipment
4. : All moveable assets that are equal to or exceed $5,000.00 in original cost and with
a useful life greater than one year shall be capitalized and entered into the on-line
financial system by the Department of Finance. . These items must be tagged with
numbered property tags. Please review the Capital Asset Manual for the correct object
code to utilize when purchasing machinery and equipment. where possible. This
classification may also include intangible assets such as computer and system
software.
Generally, this classification includes tangible and intangible personal property. Items
that meet these criteria include including computer servers, large copiers,
largemainframe system software, office machines, major machinery and construction
equipment, audio-visual equipment, communicationsand communication equipment,
medical equipment, and recreational equipment. Please review item H. below
regarding the specific instructions when purchasing technology items as defined in the
Capital Asset Manual.
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Maricopa County Policy Policy Number: A2507
A2507
Policy Title Capital Asset Policy:
CAPITAL ASSETS Revision: #Current
Adoption Date:
Software that is purchased for a “main frame” system will be capitalized
under this category. The initial purchase will be capitalized only; the
annual maintenance costs will not be capitalized.
5.Vehicles
5. : All vehicles that are equal to or exceed with an acquisition cost of $5,000.00 in
original cost or more and with a useful life greater than one year shall be capitalized
and entered into the on-line financial system. Generally, this classification includes,
including construction vehicles, passenger vehicles, trucks, trailers, aircraft,
watercraft, and other mechanized vehicles. Please review the Capital Asset Manual
for the correct object code to utilize when purchasing vehicles. Please review the
specific instructions when purchasing vehiclesCosts incurred to get the vehicle ready
for its intended use, such as defined in the Capital Asset Manuallight bars, attached
equipment, and signage, should be included in the original cost of the asset and
capitalized.
6. Infrastructure Assets: Long-lived capital assets that normally are stationary in
nature and can be preserved for a significantly greater number of years than most
capital assets. All infrastructure with an acquisition cost of $5,000 or more and a useful
life greater than one year shall be capitalized. Examples of infrastructure assets
include roads, bridges, tunnels, drainage systems, water and sewer systems, dams,
and traffic control systems.
F.E. The Board of Supervisors/Board of Directors must approve and accept all capital
asset donations via the agenda process. before the capital asset can be recorded on the
CGI Advantage financial system. Donated assets should be recorded at the estimated fair
market value at the date of the gift. These items are to be included in the on-lineCGI
Advantage financial system or the Department/Special District Inventory Control Listing
depending upon the value of the asset. Specific information and detailed procedures are
contained in the Policy A2508 – Receiving Donations.
It is the responsibility of each individual departmentDepartment/Special District to
reportenter all capital asset donations in the CGI Advantage financial system for all land
and buildings (regardless of value), and improvements other than buildings, machinery,
equipment and vehicles that are equal to or exceedmeet the capitalization level of
$5,000.00 to the Department of Finance. The individual must submit the appropriate
acquisition form with athreshold. A copy of the approved agenda item to the Department
of Finance to ensure donated assets are included in the on-line financial system and
appropriately recorded in the financial records. This includes all Land and Buildings
(regardless of value), Improvements Other Than Buildings (should be uploaded to the CGI
Advantage financial system along with the appropriate supporting documentation for the
estimated value of $5,000.00 or more), Machinery, Equipment and Vehicles (value of
$5,000.00 or more). .
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Maricopa County Policy Policy Number: A2507
A2507
Policy Title Capital Asset Policy:
CAPITAL ASSETS Revision: #Current
Adoption Date:
G.F. Capital Assetsassets acquired through a capital lease agreement will be recorded
in the on-lineCGI Advantage financial system. The Department of Finance will coordinate
all capital lease agreements and maintain a copy of all capital lease documentation to
ensure effective record keeping and financial reporting. (It is the responsibility of each
departmentDepartment to ensure those items that meet the capitalization policy are
included in the on-lineCGI Advantage financial system). .
H.The Technology Financing Program (TFP) is a comprehensive program that provides a
mechanism for financing technology equipment purchases and spreading the
payments for the equipment over a three-year (36-month) period. All new
technology equipment that includes but is not limited to: desktops, laptops, servers,
printers, etc., must be financed through the TFP – including capital and non-capital
assets. All assets meeting the criteria of a capital asset (equal to or exceeding
$5,000.00 in original cost and a useful life greater than one year) must be
capitalized and entered into the on-line financial system using a capital asset
acquisition form by the Department of Finance.
I.All capital assets that are recorded into the on-line financial system must have a unique
asset number assigned.
G. All capital assets recorded in the CGI Advantage financial system must use a unique asset
number assigned by the Department of Finance or Equipment Services (vehicles).
J.H. The Straight-Line (SL) method of depreciationDepreciation shall be utilized for all
depreciable assets (except. Land and infrastructure assets as this type of asset isusing
the modified approach are not depreciated). . Straight-Lineline depreciation is calculated
as follows: the cost of an asset less the estimated salvage value (zero for Maricopa
County/Special Districts as defined in “KI” below) is divided by the estimated useful life to
arrive at an annual depreciation charge.
K.I. M
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Maricopa County Policy Policy Number: A2507
A2507
Policy Title Capital Asset Policy:
CAPITAL ASSETS Revision: #Current
Adoption Date:
aricopa County/Special Districts will fully exhaust the utility of an asset (to use an asset
for spare parts or until it becomes functionally obsolete). The cost to dispose of an asset
generally exceeds the proceeds that may be received. Therefore, therefore, salvage value
of all assets is zero.
L.J. Capital Improvement Projects (CIP)improvement projects include those projects that are
not completed at fiscal year-end for construction of buildings, improvements and other
projects meeting the capitalization level. This account represents a temporary classification
of capitalizedthreshold. Project costs may include interest, labor, materials, equipment and
overhead costs of a construction project. The expendituresExpenditures associated with
CIP are tracked and reported utilizing Functionusing Appropriation Unit Codes within the
on-lineCGI Advantage financial system. At year-end, if the project is not complete, the
amount is recorded as Work In Process (WIPconstruction in progress (CIP) and
represented in the appropriate financial statements. At the completion of a project, the
amount is capitalized and an asset is entered into the on-lineCGI Advantage financial
system. Each departmentDepartment/Special District must inform the Department of
Finance of all completed projects to ensure they are included in the on-lineCGI Advantage
financial system and accurately reported in the financial statements. For further
clarification, please see the Capital Asset Manual and the Capital Improvement Projects
& Infrastructure Manual
M.K. A complete physical validation (inventory) of all capitalized assets must be taken
on an annual basis as outlined in the Capital Asset Manual.
N.A complete physical validation (inventory) of all assets financed through the TFP –
including capital and non-capital assets must be taken on an annual basis as
outlined in the Capital Asset Manual.
O.The Department of Finance – Capital Assets Division, may conduct random reviews to
ensure compliance with the established Capital Asset Manual. The Department of
Finance will coordinate all review activities with the Departmental Capital Asset
Manager as not to disrupt the routine of the department. The review will determine
the adequacy and effectiveness of the County/Special District’s Capital Asset
Program by evaluating the reliability and integrity of asset information and the
means used to identify the value, classify the asset and record the information. It
will further identify the Department’s compliance with the Capital Asset Manual.
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Maricopa County Policy Policy Number: A2507
A2507
Policy Title Capital Asset Policy:
CAPITAL ASSETS Revision: #Current
Adoption Date:
P.L. To ensure that correct and accurate Capital Assetcapital asset information is
available to County/Special District management, the Department of Finance will complete
a monthly reconciliation of capital asset expenditures (utilizing capital asset object codes)
against Capital Asset Acquisitionscapital asset acquisitions and/or
Bettermentsbetterments entered into the on-lineCGI Advantage financial system. Upon
completion of the reconciliation, the Department of Finance will prepare and submit to the
Departmental Capital Asset ManagerDesignee a report that delineates the findings. It is
the responsibility of each departmentDepartment/Special District to review and complete
the reconciliation within ten (10) working days from the date of distribution. prior to the
next month-end close. This will ensure all actions are taken prior to the next “month-end”
close. monthly reconciliation. Any discrepancies identified on this report must be
communicated to the Department of Finance – Capital Assetcapital asset personnel
immediately to ensure corrective action is taken.
Q.M. It is the responsibility of each individual departmentDepartment/Special District to
process all Capital Asset capital asset transactions including dispositions, transfers, and
changechanges/modifications within 1530 working days of occurrence.
E
R.Department/Special District Capital Asset Managers who knowingly and willfully submit
falsified capital asset information shall be referred to the appropriate departmental
authority for any necessary action.
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Maricopa County Policy Policy Number: A2507
A2507
Policy Title Capital Asset Policy:
CAPITAL ASSETS Revision: #Current
Adoption Date:
A.N. ach Department/Special District responsible for infrastructure assets must
maintain an up-to-date inventory of infrastructure assets. Inventory details are required to
be submitted to the Department of Finance annually at fiscal year-end. Qualifying
infrastructure assets may be reported using either the modified approach or depreciation
accounting. Maintaining an up-to-date inventory listing is one of the requirements for
infrastructure accounted for under the modified approach. Specific information and
detailed procedures are contained in the Capital Improvement Projects & Infrastructure
Manual.
D.V. RESPONSIBILITIES:
A. The County/Special Districts (Department Directors): Appointing Authorities) are
responsible to:
1. Responsible to ensureEnsure the safety of all Capital Assetscapital assets procured
or donated within their respective departmentDepartment(s).
2. Responsible to manageManage the overall Capital Asset Program within their
respective departmentDepartment(s).
3. Responsible to ensureEnsure the Annual Capital Asset Validation is completed
accurately as defined in the Capital Asset Manual.
4. Responsible to reviewReview and certify the annual Capital Asset Validation as defined
in Capital Asset Manual.
5. Responsible to reviewReview and authorize all Capital Assetcapital asset
Disposition(s) within their respective departmentDepartment(s).
6. Responsible to reviewReview all Capital Assetcapital asset reports distributed by the
Department of Finance.
7. Responsible to defineDesignate a specific individual within their respective
departmentDepartment(s) as the Department Capital Asset Manager. Designee. In
addition, they are responsible to inform the Department of Finance of any change in
Capital Asset ManagerDesignee assignment within 30 working days of occurrence.
The Department of Finance:
Responsible to provide each department with a monthly reconciliation of the capital
expenditures.
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Maricopa County Policy Policy Number: A2507
A2507
Policy Title Capital Asset Policy:
CAPITAL ASSETS Revision: #Current
Adoption Date:
8. Responsible to provide at minimum a quarterly Reconciliation Status Report (RSR) to
Department Directors, Chief Officers and Elected Officials to provide awareness
regarding their specific department(s) compliance with Maintain inventory of
infrastructure assets by detailed tracking and categorizing of project expenditures
(Department/Special District with infrastructure). Support for the capital and non-
capital portions of every project should be retained and supported for audit purposes.
B. Departmental Capital Asset Designee is responsible to:
Complete the monthly reconciliation process.
Responsible to provide numbered asset tags.
Responsible to provide a complete listing of capital assets on a quarterly basis, or upon
request.
Responsible to provide training and guidance to departmental staff regarding capital
asset management.
Responsible to maintain the on-line financial system to ensure accurate and timely
financial reporting.
Departmental Capital Asset Manager:
1. Responsible to complete the monthly reconciliation (as defined in the Capital Asset
Manual) of theof capital asset expenditures and capital asset acquisition and/or
betterment forms entered into the CGI Advantage financial system (as defined in the
Capital Asset Manual) and return that information to the Department of Finance within
10 working daysprior to the next month-end close.
2. Responsible to processProcess all capital asset transactions within 1530 working days
of occurrence. This includes dispositions, transfers, change/modifications and journal
vouchers.
3. Responsible to affixAssign a capital asset tag onnumber to all capital assetsasset as
defined in the Capital Asset Manual.
Internal Audit Department:
C. Responsible of Finance is responsible to review the department/Special District
compliance with the Capital Asset Policy and Capital Asset Manual.:
1. Provide each Department with a monthly reconciliation of capital expenditures.
2. Provide numbered asset tags.
3. Provide a complete listing of capital asset for the annual validation, or upon request.
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Maricopa County Policy Policy Number: A2507
A2507
Policy Title Capital Asset Policy:
CAPITAL ASSETS Revision: #Current
Adoption Date:
4. Provide training and guidance to departmental staff regarding capital asset
management.
5. Maintain the CGI Advantage financial system to ensure accurate and timely financial
reporting.
Revision History
Version Revision Date Description of Revision
1 4-6-2005 Initial version. (C-18-05-022,023,024,025-6-00)
2 Updated purpose and definitions. Clarified technical language and accounting
application name. Added reference to Infrastructure Assets and Department
of Finance responsibilities. (C-18-19-010-6-00)
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