state of connecticut

Property Control Manual
Chapter 1

OVERVIEW


Questions regarding this chapter should be directed to the following:
Asset and Inventory Mailbox osc.assets@ct.gov
Elizabeth Daly, CPPA 860-702-3436 elizabeth.l.daly@ct.gov 
Fiscal Policy Statewide Services 860-702-3440  

Authority
Section 4-36 of the Connecticut General Statutes, inventory of state property provides:

"Each state agency shall establish and keep an inventory account in the form prescribed by the Comptroller, and shall, annually, on or before October first, transmit to the Comptroller a detailed inventory, as of June thirtieth, of all of the following property owned by the state and in the custody of such agency:
1. Real property, and
2. Personal property having a cost of one thousand dollars or more.
For audit purposes, each state agency shall establish and keep a list of personal property having a value less than the capitalization threshold and defined as "controllable property" in the property control manual published by the Office of the State Comptroller."

The Office of the State Comptroller Memorandum 2015-05 revised the capitalization threshold for personal property as follows:

Personal property acquired prior to July 1, 2015 will have a capitalization threshold of one thousand dollars and effective July 1, 2015 the capitalization threshold for personal property is five thousand dollars.

Section 4-33a of the Connecticut General Statutes, illegal, irregular or unsafe handling of state or quasi-public agency funds provides:

"All boards of trustees of state institutions, state department heads, boards, commissions, other state agencies responsible for state property and funds and quasi-public agencies, as defined in Section 1-120, shall promptly notify the Auditors of Public Accounts and the Comptroller of any unauthorized, illegal, irregular or unsafe handling or expenditure of state or quasi-public agency funds or breakdowns in the safekeeping of any other resources of the state or quasi-public agencies or contemplated action to do the same within their knowledge."

Purpose
All State agencies must have policies and procedures in place to ensure that all assets currently owned, purchased under a capital lease, or certain non-owned property in possession of the state where insurance is required be properly recorded and reported by each respective state agency. This manual establishes guidelines for providing adequate oversight.

Because property represents one of the largest investments being made by the State, complete accountability must be maintained and safeguards established to protect this investment.

The information generated from property records required in this manual will be used to determine the total value of all property owned by or in the custody of each State agency for the Office of the State Comptroller's Annual Report and additional cost accounting reports. The establishment of accurate records and reporting is necessary to ensure that State resources are adequately accounted for in accordance with generally accepted accounting principles (GAAP) for State governments and methods of reporting will provide this office with current values for determining adequate insurance coverage on all the assets of the State.

Scope
This policy applies to all branches of state government.

Agency Responsibilities
Each agency shall appoint a person to be responsible for the following:

1. The establishment and maintenance of a Property Control System, which includes an agency policy and procedure manual.
   
2. The preparation and timely submission of the Annual Report (Form CO-59 Fixed Assets/Property Inventory Report/GAAP Reporting Form) of all Real Property regardless of cost and Personal property having a cost of one thousand or more for assets acquired prior to July 1, 2015 and effective July 1, 2015 personal property having a cost of five thousand dollars or more.
   
3. The reporting of Adjustments to Real and Personal Property Form CO-853 (Section 4-33a of the General Statutes of Connecticut).

The Office of the State Comptroller's Fiscal Policy Statewide Services Unit must be notified of the name of the person designated by the agency head to be responsible for property control. This information must be updated annually on or before October 1st on the Property Control Questionnaire provided by the Comptroller's Office as part of the Annual Report of Real and Personal Property package.

Capital Assets
There are three major asset categories utilized by the State and the individual state agencies for financial reporting. Proper accounting for assets requires the capitalization of appropriate expenditures for each of the following major asset categories:

1. Real Property (includes land, buildings, site improvements and improvements on leased property).

Buildings are all real estate, excluding land, which are used for shelter, dwelling, and other similar agency purposes. The statewide definition is "a relatively permanent structure to house persons or property". The asset category "Buildings" includes improvements to buildings.
 
Construction is projects whose depreciation does not begin until the capital assets are substantially ready to be placed into service.
 
Easements are an interest in land owned by another that entitles its holder to a specific limited purpose. Easements have an indefinite useful life or a useful life of 25 years or more. Easements are considered intangible assets that give the right to use a given space that you do not own.
 
Land is non-expendable, real property whose title is held by a state agency. The recorded asset cost should include, in addition to the acquisition price, such ancillary costs as legal and title fees, unpaid taxes assumed, surveying and recording fees, appraisal and negotiation fees, damage payments, site preparation costs (clearing, filling, and leveling), and demolition of unwanted structures.
 
Note:
The cost of land does not include expenditures in connection with land improvements such as paving, fencing, and lighting.
 
Site improvements are all improvements not specifically identifiable to an individual building except non-depreciable improvements to land parcels such as grading or filling expenditures. Included within this category are agency fences, retaining walls, parking lots and most landscaping, and similar assets which, while not identifiable to any particular structure, nevertheless have a quantifiable value to the agency.
 
Improvements on Leased Property are additions, improvements or alterations made by the lessee to leased property. The lessee has the right to use such facilities and improvements during the life of the lease, but the improvements made to the property would revert to the lessor at the expiration of the lease.
 
2. Personal Property is property that meets the capitalization threshold (includes office and scientific equipment, vehicles, inventory, etc.).
Equipment includes:
Infrastructure is a long-lived asset that normally is 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. Infrastructure is reported in the GAAP closing package.
 
Capital Lease is a lease that transfers substantially all the benefits and risks of ownership to the lessee.
 
Software is software that meets the capitalization threshold and is owned by the State of Connecticut. It includes internally generated software.
 
Licensed Software is an individual software license that meets the capital threshold.
 
Art is statues, paintings, sculptures, Historical Treasures (antiquated military and other equipment, historical documents and artifacts, buildings considered part of a display, and museum collections including books).
 
Inventory is either Material Goods in Process or Stores and Supplies. Inventory must collectively have a cost that meets the capital threshold.
Materials and Goods in Process
Items under this section represent any resalable articles which are manufactured, fabricated or assembled in a school, prison or in any shop that is under the jurisdiction of the State agency.

Stores and Supplies

Stock items and supplies, used and consumed in the daily operations of an agency, such as food, office supplies, perishables, table or bed linens, dishes, small tools, appliances, and articles of a similar nature should be recorded on a separate register page, in total, for each building.
3. Intangible Assets
GASB No. 51
defines intangible assets as capital assets that possess all of the following characteristics:
 
1. Lack of physical substance.
An asset may be contained in or on an item with physical substance, for example, a compact disc in the case of computer software. An asset also may be closely associated with another item that has physical substance, for example, the underlying land in the case of a right-of-way easement. These modes of containment and associated items should not be considered when determining whether or not an asset lacks physical substance.
 
2. Nonfinancial nature.
An asset with a nonfinancial nature is one that is not in a monetary form similar to cash and investment securities, and it represents neither a claim or right to assets in a monetary form similar to receivables, nor a prepayment for goods or services.
 
3. Initial useful life extending beyond a single reporting period.
 
Some examples of Intangible Assets are:
Trustee Account Assets
The assets on hand, belonging to a trustee account, should be included in the cost section that is reported on form CO-59, Asset Management/Inventory Report/GAAP Reporting Form, and submitted to the Office of the State Comptroller, Fiscal Policy Statewide Services Unit by October 1st of each year. The cost of trustee account property should be listed under the category "Other Property Owned With Trustee Funds (Outside of Core-CT)" on the CO-59.
 
Questions and/or comments regarding the manual may be directed to:

Fiscal Policy Statewide Services Unit
Office of the State Comptroller,
55 Elm Street, Hartford, Connecticut 06106
860-702-3440

 
Revisions to the Manual
The Office of the State Comptroller will maintain a master control copy of the manual. The Administrative Services Division's Fiscal Policy Statewide Services Unit is responsible for updating the manual and distributing the new or revised policies and procedures to the State agencies.
 
The Office of the State Comptroller maintains a distribution list for issuing Property Control Manual material. This list identifies each State agency and the address to which material will be sent. Normally, updates will be addressed to the agency property control individual.

Upon request, this publication will be made available in large print, computer readable formats, or Braille pursuant to the requestor's requirements.


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