HomeMy WebLinkAboutBPW-04-19-00-08 Capital.UtilityResolution BPW 04-19-0o-o8
RESOLUTION REGARDING CAPITAIJzING VERSUS EXPENSING
WHEREAS, the City of Carmel Board of Public Works and Safety C'Board") has the authority to
increase the monetary level for capitalizing versus expensing for the City's Class A Water and Wastewater
Utilities; and
WHEREAS, the City's current capitalization Level is Five Hundred Dollars ($500.00), but the
proposed revisions to the National Association of Regulatory Utility Commissioners Uniform System of
Accounts for Class A water and wastewater utilities include the monetary level for capitalization for Seven
Hundred Fifty Dollars ($750.00).
NOW, THEREFORE, BE IT RESOLVED by the City of Carmel Board of Public Works and
Safety that the City Utilities monetary level for capitalizing versus expensing should be and the same is
increased from Five Hundred Dollars ($500.00) to Seven Hundred Fifty Dollars ($750.00).
Passed and approved by the Board of Public Works and Safety of the City of Carreel, Indiana, this
day of ~ ] ,2000, by a vote of C~ ayes and C' nays.
Jam~~i~~ ard,~iding 0
Ma ember
Date:. . -~../~ ""
Diana L. C~?/~t~tC, Cle ~'reasurer
Date:
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October 13, 1999
To: Elaine Bass
From: Carol McManama
Senior Utility Accountant
Both the utilities and the Clerk Treasurer are audited by the State Board of
Accounts and it is this organization which decides whether our records are kept in a
satisfactory manner. The. State Board of Accounts mandated that we change the charts of
accounts for the utilities to the Uniform System of Accounts for Class A Water Utilities,
1996 and the Uniform System &Accounts for Class A Wastewater Utilities, 1996. The
chart of accounts dictates the way our records are organized.
In the 1980s the State Board of Accounts requested that the Board of Public
Works set a minimum cost for assets to be capitalized-(purchased from the depreciation
fund and included in the balance sheet as a fixed asset) vs. expensed. This is of concern
because records have to be maintained on fixed assets so long as they are in the
possession of the utility. Also, depreciation has to be calculated on those assets every
year. Because of these requirements such assets require more accounting effort than do
assets which are expensed when they are purchased. It is not desirable to put forth this
effort for an inexpensive item. Due to inflation the capitalization threshold needs to be
raised periodically. The Board of Public Works has raised that level at least once since it
was set in the 1980s. Currently the limit is set at $500 for the utilities. However, the
chart of accounts mandated by the State Board of Accounts suggests increasing the
monetary level for capitalizing versus expensing to $750 for Class A utilities.
The utilities need to increase the capitalization threshold to the amount suggested
in the chart of accounts. To make this increase official we need a Board of Public Works
resolution approving the change. Could you please prepare such a resolution?
Thank you for your help.
Summary of Proposed Revisions to the
NARUC Uniform System of Accounts for
Class A, B & C Water and Wast. water Utilities
Proposed Chan~es
Water
Change the term "sewer" to "waSt.water"
where applicable to conform with the
terminology currently used by the industry.
ABC
Increased the Class A, B & C revenue levels
to account for inflation since the levels
were last changed in 1984. This was done
based on the same index used to set the
levels in the 1984 revision. New levels are:
ABC
Class A:
Class B:
Class C:
$1,000,000 and more,
$200,000 to $999,999, and
Less than $200,000.
Included a monetary level for capitalizing
versus expensing for all Classes as follows:
ABC
Class A: $750
Class B: $400
Class C: $150
Added definitions, accounting instructions
and subaccounts to provide for the accounting
for regulatory assets and liabilities.
AB
Added a new water plant account to separately
account for backflow prevention devices.
ABC
Added new wastewater plant accounts to
separately account for reuse facilities
used to produce reclaimed water.
Added new wastewater expense accounts to
separately account for the operation of
reuse facilities to produce reclaimed water.
Wastewater
ABC
ABC
ABC
AB
AB
AB
0
5
Summnry of Proposed Revisions to the
NARUC Uniform System of Accounts for
Class A, B & C Water and Wast. water Utilities
ProDosed Chan~,es
Water
Change the term "sewer" to "wast.water"
where applicable to conform with the
terminology currently used by the industry.
.ABC
Increased the Class A, B & C revenue levels
to account for inflation since the levels
were last changed in 1984. This was done
based on the same index used to set the
levels in the 1984 revision. New levels are:
ABC
Class A:
Class B:
Class C:
$1,000,000 and more,
$200,000 to $999,999, and
Less than $200,000.
Included a monetary level for capitalizing
versus expensing for all Classes as follows:
ABC
Class A: $750
Class B: $400
Class C: $150
Added definitions, accounting instructions
and subaccounts to provide for the accounting
for regulatory assets and liabilities.
AB
Added a new water plant account to separately
account for backflow prevention devices.
ABC
Added new wastewater plant accounts to
separately account for reuse facilities'
used to produce reclaimed water.
Added new wastewater expense accounts to
separately account for the operation of
reuse facilities to produce reclaimed water.
Wast.water
ABC
ABC
ABC
AB
AB
AB