Board Policy No. 29 Asset Management Summary This policy establishes the guidelines that the North County Transit District (NCTD) will utilize in distinguishing capital acquisitions from operational expenditures with regard to tangible assets and for the management of property, pursuant to Resolution No. 16-10, dated October 20, 2016. General Policy The NCTD Finance Division establishes property management standards and procedures with other NCTD Divisions and Departments to implement the standards set forth below, and in accordance with federal, including federal grant and circular requirements, state and local grantor requirements. Property Determination 1. Capital assets are defined as assets of significant value that yield service to the District for a period of time longer than twelve (12) months, this include assets derived though project construction to include surplus and spare items. 2. Capital assets have a minimum acquisition cost of $5,000. However, the minimum cost standard may be applied to aggregates of units of similar type or purpose, rather than the unit itself. The minimum useful life for aggregates will be determined based on NCTD historical experience and adherence to federal and state requirements and guidelines. See Attachment A, which shall be modified from time to time as a ministerial matter without the need for Board approval, for a listing of asset categories and standard useful lives. 3. Treatment of costs subsequent to acquisition: Expenditures on capital assets which are incurred after their original acquisition are defined and recorded as follows: a. Repair or maintenance: Expenditures which neither materially add to the value of property nor appreciably prolong its life, but merely keep it in an ordinary efficient operating condition. These costs are expensed and not capitalized. b. Betterments: Consist of the replacement of a unit of an existing asset by an improved or superior unit, usually resulting in a more productive, efficient, or longer-lived asset. These items shall be capitalized as individual asset records in the fixed asset system and shall refer to the original asset. Examples include adding air conditioning to a passenger car, carpeting the entire floor of a building not previously carpeted, and replacing regular windows in a building with solar windows for greater energy efficiency. c. Replacements: Replacement of a part of an existing asset with another of like quality is not a betterment, even though the useful life is maintained or extended. These items shall be capitalized as individual asset records in the fixed asset system and shall refer to the original asset. Examples include replacing existing carpeting because of flooding and replacing a window with the same type of window because it is broken. Page 1 of 6
Board Policy No. 29 Asset Management 4. The decision whether or not to capitalize an expenditure must be based on the definitions and rules described above and the ability to have control of the item. 5. Assets which are not capitalized shall be maintained, secured, and controlled by the division that acquired the asset. For such assets, asset records will be maintained by the Finance Division. Asset Management 1. Property records of capitalized assets shall be maintained accurately and shall include: a. Description of the property b. Manufacturer s serial number, model number, and the District s identification number c. Acquisition date and cost d. Source of funds used to purchase the property (the grant number under which it was procured.) e. Percentage of Federal participation in the cost, if Federal funding is used. f. The NCTD purchase order, contract number, and check number g. Location of the property h. Estimated life of property i. User of property j. Any disposition data, including the date of disposal and sale price, or, where applicable, method used to determine its fair market value 2. When practical, within thirty (30) days of acquisition, capital assets must be permanently marked or tagged. It is the responsibility of the department acquiring the asset to mark or tag the asset and notify the Finance Division with the following information (see Attachment B NCTD Fixed Assets Tagging Form : a. Property tag number/serial number b. Date placed into service and purchase order number c. Description including manufacturer and model, if applicable d. Location of property e. User of property/responsible department f. Estimated life of property 3. The NCTD Finance Division, working with assigned department personnel, will be responsible for the inventory of capitalized property assigned to the individual departments. A complete physical inventory of assets costing $5,000 or more with federal interest must be taken and the results reconciled with the property records at least once every two years. A computer listing will be provided by the Finance Division to each Department Manager. This listing will include description, location, and property number. Each department shall, in connection with the inventory, verify the existence and current utilization of the property. Any differences between quantities determined by the physical inspection and those shown in the accounting records shall be investigated to determine the reasons for the difference. Page 2 of 6
Board Policy No. 29 Asset Management The computer listing of the assets shall be returned to the Finance Division noting any changes to the asset records and explanation of any assets not accounted for during the inventory. Explanation for the missing assets shall include: a. Property tag number/serial number b. Date of acquisition c. Description d. Location from which item is missing e. Original cost f. Cause, if known, of missing item g. User of property 4. NCTD shall institute a control system to insure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft of property shall be investigated and fully documented and forwarded to the Finance Department in a timely manner. When an asset funded with grantor funds is damaged or destroyed, the grantor must be notified per the funding source(s) for the respective capital asset. For capital assets acquired with Federal Transit Administration (FTA) funds is damaged or destroyed, the FTA must be notified if the market value is $5,000 or more. If the asset is replaced with insurance proceeds or otherwise, the federal portion is transferred to the new asset. If the asset is not replaced, NCTD may be required to reimburse FTA the federal share at the fair market value immediately prior to the loss. 5. It is the responsibility of each Division Chief to institute an adequate maintenance program to keep the property in good condition. 6. It is the responsibility of the Division Chief and/or his/her designee to notify the Finance Division when any property is being transferred to another individual either in their own department or to another department. The Department shall prepare the NCTD Fixed Assets Transfer Form. This form is included in this policy as Attachment C. Asset Disposal 1. Upon determination that an asset is obsolete and/or useless for District purposes, each department shall prepare the appropriate disposal form, either the Asset disposal formnon auction or Asset disposal form-for auction. 2. Assets may be disposed of by the following methods: a. County of San Diego auction; b. County of San Diego auction contractor, if the District is named as a participating agency in the contract; c. Donation, sale, or barter to any governmental agency; d. Recycled at an authorized recycling center operated under private or governmental auspices; e. Sold by online auction, reverse auction, or other methods employing internet technology; Page 3 of 6
Board Policy No. 29 Asset Management DATE ISSUED REVISION NUMBER RESOLUTION NUMBER COMMENTS 10/18/2012 Adopted 10/17/2013 1 2013 Revision 10/16/2014 2 2014 Revision 10/20/2016 3 16-10 2016 Revision Page 5 of 6
ASSET CODE ATTACHMENT A Assets and Useful Lives ASSET OBJECT Board Policy No. 29 Asset Management JDE SUBSIDIARY EQUIPMENT ITEM DESCRIPTIONS USEFUL LIFE in YEARS 104 17210 Revenue Vehicles 104 17210 750 Buses HDB 30 feet or longer 10 104 17210 755 Buses LDF 5 104 17210 760 Bus Improvements/Refurbishments 3 104 17210 765 Other Revenue Vehicles (LIFT sedans and 5 vans) 104 17210 780 Rail Vehicles (Rail cars & locomotives) 25 104 17210 785 Rail Vehicles 7 Improvements/Refurbishments 223 17220 Service Vehicles (Autos, Trucks, Trailers requires 5 Department of Motor Vehicle Registration) 337 17030 710-725 Buildings and Structures 30 338 17040 701 Improvement to Buildings and Structures (up to 5 $15,000) 338 17040 702 Improvement to Buildings and Structures (over to 10 $15,000) 431 17370 Transit Way Equipment (Bus Shelters, Signs, 5 Poles, Trash Containers) 432 17110 Right of Way Rail (Ballasts, Bridges, Tracks, 20 Ties, Culverts, Grade Crossings, Gradings) 433 17120 Improvements to Right of Way 10 434 17360 Operating Yard Equipment (Bus Washers, Service 10 Islands, etc.) 435 17350 701 Shop and Garage Equipment (up to $15,000) 3 435 17350 702 Shop and Garage Equipment (over to $15,000) 5 436 17130 Communication Signal Equipment (Electricode Project, Antenna Towers, Switch Machines, Electric Locks, Crossing Gate Mechanisms, Wayside and Crossing Signals, Signal Relays) 20 438 17310 Vehicle Control Equipment (Radios) 10 439 17320 Revenue Collection Equipment 439 17320 730 Sorters & Counters 5 439 17320 735 Fareboxes 10 440 17340 Data Processing Software & Hardware 3 500 17330 Furniture and Fixtures 5 600 17010 Land N/A 601 17020 Improvements to Land (Landscaping, parking lots, sidewalks, gutter) 10 Page 6 of 6
NCTD Fixed Assets Tagging Form Return completed form to the Accounting Dept. Attn: Fixed Assets Date Completed Tag # S/N Manufacturer Model Description Location Placed in to Service Date Responsible Department Project / Account # Vendor P. O. #
NCTD Fixed Assets Transfer Form Return completed form to Accounting Dept. Attn: Fixed Assets Date Completed Transfer from Responsible Tag # S/N Manufacturer Model Description Location Department Location Transfer to Responsible Department