Duane Hicks
The Town of Fort Frances is getting a better handle on what its assets are and how they depreciate over time, which should help with future budgeting.
Meghan Haehn, Public Sector Accounting Board co-ordinator for the Town of Fort Frances, spoke to council Monday night regarding the completion of a review of the town’s Tangible Capital Assets (TCA)—basically, everything the town owns—and what will continue to be done to manage them in the future.
Haehn explained that municipalities became responsible for the accounting on their TCAs on a accrual basis beginning last January.
Where they used to expense their capital purchases in previous years, they now reflect them in a for-profit model, where TCAs are recorded at their historical cost and depreciated over their estimated useful life.
Since last year, each town department has taken inventory of its TCAs and valued them. The major push was in Operations and Facilities, where they took stock of sanitary and storm sewer distribution systems and roads.
The current value (or net book value) of assets is calculated by taking the gross book value (how much assets cost to initially purchase) minus accumulated amortization (depreciation effecting an asset’s use over its life).
After adding up the numbers, the town has a gross book value of $121,721,000 in assets, but an accumulated amortization of $46,789,000, equalling a net book value of about $75 million.
“A lot of our assets have been considerably used, so there is quite a bit of accumulated amortization,” noted Haehn.
Moving ahead, Haehn said all of the departments have been trained as to what is a capital asset and have developed roles and responsibilities, and implemented TCA software to track those assets over time.
She noted all of the 2008 and 2009 TCA information has been gathered from all of the departments, and later this week she will meet with the departments to try and determine 2010 amortization estimates council and administration can incorporate in their 2010 budget discussions.
Haehn said now that the town’s assets have been valued, the next step will be to move towards asset management and planning now for having to eventually replace assets down the road.
“Asset management focuses on sustainability going forward,” she noted. “It’s concerned about funding the resources needed to maintain the town’s assets going forward.
“This type of foresight will be necessary in budgeting going forward, and as we’ve seen, will likely be necessary to access a considerable amount of funding going forward,” Haehn stressed.
“A lot of capital plans are now required,” she added. “This also fits with the five-year capital plan policy council just passed.”
