RESOLUTION NO. 25-34
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NORWALK
ADOPTING THE FIXED ASSET CAPITALIZATION POLICY
WHEREAS, the City of Norwalk maintains a Fixed Asset Capitalization Policy to ensure consistent accounting and reporting of capital assets in accordance with Government Accounting Standards Board (“GASB”) Standards; and WHEREAS, the policy has been updated to reflect changes in asset thresholds, clarifications and accounting standards; and
WHEREAS, Exhibit A attached hereto is the Fixed Asset Capitalization Policy, updates to the Fixed Asset Capitalization Policy will continue to be made as-needed.
NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF NORWALK
HEREBY DETERMINES, FINDS, AND RESOLVES AS FOLLOWS:
Section 1.The City Council of the City of Norwalk does hereby approve the attached Fixed Asset Capitalization Policy, which is incorporated by this reference as though set forth in full, as the policy which shall supersede prior policies and shall govern the City of Norwalk’s fixed asset capitalization functions.
Section 2. The Mayor, or presiding officer, is hereby authorized to affix his signature on this Resolution signifying its adoption by the City Council of the City of Norwalk and the City Clerk, or her duly appointed assistant, is directed to attest hereto.
APPROVED AND ADOPTED on this 5th day of August 2025.
TONY AYALA,
MAYOR
ATTEST:
____________________________
THERESA DEVOY, CMC
CITY CLERK
Attachment No. 2
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0 CITY OF NORWALK POLICY STATEMENT
Number: 25-03
Subject: Fixed Asset Policy and Procedures
Adopted Date: August 5, 2025
Effective Date: August 5, 2025
BACKGROUND
The City of Norwalk's fixed asset policy stems from two major objectives: to accurately account for and report fixed assets in accordance with generally accepted accounting principles and the Governmental Accounting Standards Board (GASB), and to assure the safeguarding and preservation of City assets.
This policy is intended to provide specific guidance for identification, custody, capitalization and inventory of asset acquisitions.
It is the responsibility of the Finance Department to ensure fixed and inventory controlled assets will be inventoried on a regular basis and accounted for by fund and asset category.
It is the responsibility of each department to ensure that proper budgeting and purchasing guidelines are followed, and to ensure that fixed assets are adequately controlled, and safeguarded.
PURPOSE
To ensure efficient and effective accounting of all fixed assets. The purpose of accounting for the City’s fixed assets is:
1. To safeguard the investment in fixed assets.
2. To fix responsibility for custody of the equipment
3. To provide information for insurance purposes.
4. To provide information for financial reporting.
5. To account for depreciation of assets.
6. To provide historical information for use in the acquisition of future assets and the disposition of current assets.
Exhibit A
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0 GENERAL INFORMATION & DEFINITIONS
Assets that are purchased by the City that meet the requirement for a fixed asset or an inventory-controlled asset are maintained through the Fixed Asset subsystem of Pentamation. If the assets meet the requirement for a capital asset, annual depreciation expense will be calculated
1. Fixed Assets (Capital Asset) – tangible assets having a value of $10,000 these items are listed on the inventory registers will be capitalized according to the capitalization policy.
2. Land - The investment in real property other than structures and improvements. It does not include land acquired for street and road purposes.
3. Structures and Improvements - Physical property of a permanent nature such as buildings, picnic shelters, storage tanks, reservoirs and parking lots which should be capitalized as fixed assets.
4. Equipment - moveable personal property. Some examples are; furniture, machines, tools, vehicles, and typewriters are included in this category. a. In some instances, the cost test is applied to aggregates of units of similar type or purpose. In the City of Norwalk, the following items are to be aggregated: Folding Chairs, Banquet Tables, Shelving and Water Meters
5. Asset Control Form – This form must be filled out when equipment is transferred to another department, sold, abandoned or traded in. As these changes take place, they are input in the computer and the property records are updated.
6. Inventory Control Asset - item purchased with a value of $500 but less than $10,000 and a useful life of one year. This will be applied to movable assets (Vehicles and Equipment) and not to land, buildings or other immovable fixed assets. Assets subject to inventory control will be accounted for through the same system used to account for fixed assets subject to capitalization.
INTERNAL CONTROLS
The following internal controls have been put into place for the City’s Fixed and Inventory Control Assets.
1. The Finance Department maintains detailed property records as a subsystem of the Pentamation Accounting system, including acquisition date; purchase price; description; serial number; department; location and 4 4
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0 funding source.
2. Departmental transfers and final disposition will require an Asset Control Form.
The Form will be signed by the department head.
3. Asset number will be assigned to all fixed asset/inventory control purchases.
4. MIS is responsible for inventory control of all computer equipment, including Computers, iPads, monitors and printers.
5. Physical inventory will be conducted by departments on an annual basis.
CAPITALIZATION POLICY
All fixed assets (Capital Assets), including land, buildings & improvements, machinery & equipment, and infrastructure with an original cost of $10,000 or more will be subject to capitalization.
There will be no capitalization of construction in process until the project is complete All costs associated with the purchase or construction of the asset should be considered, including ancillary costs such as freight and transportation charges, site preparation expenditures, professional fees, warranties, and legal claims directly attributable to the asset acquisition.
Specific capitalization requirements are:
1. This capitalization threshold is applied to individual units of fixed assets.
2. For purposes of capitalization, the threshold will generally not be applied to components of fixed assets.
a. For example, a keyboard, monitor and central processing unit purchases as components of a computer system will be treated as a single fixed asset.
3. Donated assets will be recorded at the estimated fair market value at the date of acquisition determined by the receiving department.
4. Subscription based technology agreements (SBITA) and right to use assets will be evaluated using $10,000 capitalization threshold.
5. Purchase of computer software, including software systems, will not be capitalized.
6. Repairs to existing fixed assets will generally not be subject to capitalization 5 4
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0 unless the repair extends the useful life of the asset. In this case, it represents an improvement and is subject to the requirements described below.
7. Improvements to existing fixed assets that will extend the useful life of the related fixed asset will be subject to capitalization only if the cost of the improvement meets the $10,000 threshold.
8. Capital projects will be capitalized as "construction in progress" until completed. The costs associated with the capital project include direct costs, such as labor and materials, as well as ancillary costs.
9. Land acquisitions, rights of way, or easements, are capitalized, regardless of cost. Some infrastructure, such as traffic signals, which individually may not meet the $10,000 threshold, will be capitalized as a "system" rather than an individual asset.
10.The cost test is applied to aggregates of units of similar type or purpose based on the $10,000 threshold. In the City of Norwalk, the following items are to be aggregated:
a. Folding Chairs
b. Banquet Tables
c. Shelving
d. Water Meters
11.The following items will be evaluated based on the per unit cost rather than the aggrege total of the amount of items purchased at one time. a. Network items (switches, servers etc.)
b. Computers (CPU)
c. Monitors
d. Printers
DEPRECIATION
The City of Norwalk uses "straight line depreciation" and depreciates the original cost of a fixed asset (Capital Asset) to zero. The City does not consider salvage value.
INVENTORY CONTROL ASSET
Each department is ultimately responsible for safeguarding their assets against theft and loss.
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0 In general, inventory control will be applied to movable fixed assets and not to land, buildings or other immovable fixed assets. Assets subject to inventory control will be accounted for through the same system used to account for fixed assets subject to capitalization.
An asset will be considered under inventory control if the asset meets one of the following criteria:
1. Any asset required to be controlled and separately reporting pursuant to grant conditions or any externally imposed reporting requirement.
2. The original cost of the item is equal to $500 but less than $1,000.
3. At the request of the department head items costing less $500 maybe inventoried.
4. The City of Norwalk has determined that the following items will be considered Inventory Control Items even though the cost is less than $500 a. Cameras
b. Computer system – CPU, monitors, printers (fixed assets tag issued in conjunction with the MIS department)
c. Flashlights
d. Hand held radios
e. Time Clocks
f. Televisions (including flat screen monitors)
g. Mini refrigerators
h. Items identified by the Department head, as needed
SOURCES OF ASSETS
The following is a list of source information for new or replacement fixed assets
1.Purchase Orders - Municipal Code Section 3.16.160 requires the use of purchase orders for materials, supplies, and equipment.
2. Acquisition interface - automatically created through the accounts payable system as new items are purchased using a purchase order. In order for such a record to be created, the expenditure must be made from a capital outlay account. The expenditure accounts are:
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0 Land 3810
Automotive Equipment 3820
Specialized Automotive Equipment 3830
Buildings & Improvements 3840
Tools & Work Equipment 3850
Office Equipment 3860
Furniture & Fixtures 3870
Miscellaneous Other Equipment 3880
The Acquisition interface report must be run and reviewed for fixed assets activity
3. FTA Grants - FTA grant worksheets will contain items purchased through capital grants that are fixed assets. These expenses will be purchased on a purchase order but will not be in the accounts listed above.
4. Cal-Card – Purchases are reviewed to determine if they are fixed assets, only Finance staff is allowed to use a Cal-Card to purchase fixed assets.
5. Department Head – provide invoices for items purchased that they would like to have in the fixed asset.
PHYSICAL INVENTORY
Physical inventory is taken for both Fixed and Inventory Control Assets in June of each year;
1. Finance will forward an annual inventory form to each department. This form contains a listing of their fixed assets for review.
2. Each department is expected to inventory the assets in their custody.
3. Indicate on the annual inventory form if the asset is physically located in the department.
Line items are not allowed to remain “blank”
Return completed and signed for the Finance department.
4. Any discrepancies to the annual inventory form must be reported to the Finance Department through an Asset Control Form.
TRANSFERRING ASSETS
When a fixed or inventory-controlled asset is transferred to another department, the following steps will occur:
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0 1. An Asset Control Form must be filled out indicating which department will gain the assets and which department will lose the asset.
2. Obtain department head signature on Asset Control Form from both departments.
3. Forward form to Finance Department, preferably electronically.
4. Upon receipt of the completed Asset Control Form, the Accounting system will be updated to reflect the transfer
RETIREMENT OF ASSET
When a fixed or inventory-controlled asset is to be retired, the following step will occur:
1. Asset Control Form will be completed and approved by initiating department.
2. Initiating department will contact the Finance department (Purchasing) to coordinate asset pick-up.
The Finance department will coordinate with a surplus or auction company to dispose of the items.
3. Forward completed form to Finance Department (Purchasing), preferably electronically.
4. Upon disposal of the asset, it will be removed from the fixed asset database.
5. All proceeds from the sale of surplus property will be allocated to the City's General Fund.
INFRASTRUCTURE / CONSTRUCTION IN PROCESS
1. Use GASB Infrastructure worksheet - update with fiscal year's additions, deletions, and calculate annual depreciation. This document will be updated annually and used as reconciliation to the Infrastructure account 012-0141.
2. Infrastructure will not be recorded in fixed assets system
3. Determination should be made, in cooperation with Engineering Department what CIP expenditures qualify as increase in Fixed Assets and which are maintenance related expense s.
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0 RECONCILIATION AND REPORTING OF FIXED ASSETS
1. Fixed Assets reports generated from Pentamation reports will be reconciled annually for asset balance, accumulated depreciation and annual depreciation to the General Leader. The following is a list of fund containing fixed assets:
a. Fund 012 – Other
b. Fund 736 – Equipment Maintenance
c. Fund 702 – Water enterprise fund
d. Fund 712 – Transit enterprise fund
2. Reports used for reconciliation will contain following information:
a. Date Acquired
b. Asset Number
c. Asset Description
d. Asset Life
e. Initial Cost
f. Accumulated Depreciation
g. Current Depreciation
h. Fixed Assets by Location and Depreciation Detail (Central Square reports)
3. Existing, fully depreciated assets will be kept in the database and appear on the report.
4. Infrastructure will be kept in the GASB34 Excel worksheet and updated annual, for deprecation and new projects
5. Non deprecation assets:
a. Construction in Process will be kept on Excel Worksheet. Upon project completion, it will be either added to the Infrastructure listing or, in case of buildings, recorded as Fixed Asset into Central Square.