INTERDEPARTMENTAL MEMORANDUM

Asset Management and Inventory Directive #3

To: Chief Administrative and Fiscal Officers, Business Managers, Core-CT Asset Management Module Personnel
From: Brenda K. Halpin, Director
   Administrative Services Division
   Office of the State Comptroller
   55 Elm Street
   Hartford, CT 06106
Date:    August 31, 2010
Re:   Implementation of GASB Statement No. 51, Accounting and Financial Reporting for Intangible Assets

Purpose
The purpose of this Asset Management Directive #3 is to clarify the information included in Comptroller’s Memorandum 2010-14 and to notify agencies of changes with the Property Control Manual due to the implementation of GASB Statement No. 51, Accounting and Financial Reporting for Intangible Assets effective with the fiscal year ending June 30, 2010.

General Information
Due to the implementation of GASB Statement No. 51 there will be changes in the fiscal year end reporting of assets on the CO-59 Asset Management/Inventory Report/GAAP Reporting Form for FY 2010. We are required to include permanent land easements and licensed software not previously reported. Two new asset categories have been established on the CO-59 form and within the Core-CT Asset Management Module to capture this data. The new asset categories and profiles were established in Core-CT earlier this fiscal year. On June 30th a daily mail was released regarding the new asset profiles. The first asset profile is 1EASEMENTS for permanent land easements. The second asset profile is LSOFTWARE for licensed software over $1,000.

Permanent Land Easements
State agencies that currently have permanent land easements that were acquired during fiscal year 2010 are to record in summary the total cost on the CO-59 under the asset category EASE column 4.

One entry is to be made in the Core-CT Asset Management Module as a “Basic Add” with the summary amount for FY 2010. When the standard Core-CT reports are prepared for completing the CO-59 this information will not be included because the data is being entered in FY 2011. Beginning with fiscal year 2011 as each permanent land easement is acquired it should be identified as an asset in the Core-CT Asset Management Module with the correct asset profile.

Licensed Software
Data is required for all licensed software for the past six years beginning with fiscal year 2005. A new form has been created entitled “Summary Licensed Software Report” and is available on the Comptroller’s website at www.osc.ct.gov/agencies/forms.  This form is for use for this year only. Complete this form by providing total cost information for all agency licensed software purchased during each of the past five fiscal years. The licensed software must meet the capitalization
threshold of $1,000 or more.
Supporting documentation should be available for audit review purposes. The total cost of all five years should be listed as last year's balance in column 3 on the
CO-59 for FY 2010 for asset category LSOFT. Any costs for fiscal year 2010 should be reported in
column 4 as additions to LSOFT. The cost of all licensed software should have been captured in the agency software inventory as required by the Property Control Manual.

Six entries are to be made in the Core-CT Asset Management Module as a “Basic Add” with the summary amount for each fiscal year (eg. 2005, 2006, 2007, 2008, 2009, 2010) identified on the summary document. These transactions must be completed by October 1, 2010. When the standard Core-CT reports are prepared for completing the CO-59 for FY 2010 this information will not be included because the data is being entered in FY 2011.

A training guide providing step by step instructions on how to properly enter each fiscal year summary total is available on the Core-CT website at

http://www.core-ct.state.ct.us/user/finjobaids/am.htm

Frequently Asked Questions

Q. Should commercially available computer software that is purchased or licensed by the State agency and placed into operation without modification requiring more than minimal incremental effort (that is, the computer software is not considered internally generated) be considered an intangible asset as required for Statement #51?
A. Yes. Commercially available computer software that is not considered internally generated computer software, whether purchased or licensed, generally will meet the description of an intangible asset as required for Statement #51.
 
Q. We have software licenses that require an annual renewal. Should the license renewal costs be added into the original cost of the software license?
A. No, the annual renewal should not be included, it should be expensed.
 
Q. Our agency has a maintenance contract with its software vendor under which it pays an annual fixed fee that covers all required maintenance and any minor unspecified upgrades issued during the year by the vendor. Is this amount included in the cost of the software?
A. Any maintenance costs or minor unspecified upgrades associated with the software are to be expensed and are not to be included.
 
Q. If our agency purchases an upgrade to a new version of software, how should we account for this purchase on the CO-59?
A. Any upgrades to existing software should be capitalized as additions and the old version costs should be retired as deletions.

Q. If our agency purchased our first version of specific software in FY 2006 and then purchased the upgrade in FY 2009 how do we handle the reporting of that on the summary document?
A. Only include the upgraded version that was purchased in FY 2009 on the summary. In addition, if the agency purchased the upgrade after FY 2009, it would report the upgrade on the CO-59 according to the policy described in the previous question.

Conclusion
The above information pertains to all state agencies when completing the CO-59 beginning with fiscal year 2010. The completed CO-59 with a copy of the Summary Licensed Software Report and the CO-648B (if applicable) must be sent directly to the Comptroller's Office, Administrative Services Division, 55 Elm Street, Hartford, CT 06106 Attn.: Michael Carragher. The Property Control Questionnaire should be emailed to OSC.Assets@po.state.ct.usThe reports are to be filed by close of business Friday, October 1, 2010.

Questions regarding the completion of the CO-59, licensed software report, questionnaire, CO-648B or this memorandum should be directed to OSC.Assets@po.state.ct.us. All forms should be printed from the Comptroller's website at http://www.osc.ct.gov/agencies/forms

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