Real Property Additions to Capitalized Assets Timeliness of Additions

IM 2012-059

Instruction Memorandum

UNITED STATES DEPARTMENT OF THE INTERIOR

BUREAU OF LAND MANAGEMENT

WASHINGTON, D.C. 20240

http://www.blm.gov

February 01, 2012

In Reply Refer To:

1530 (854) P

EMS TRANSMISSION 02/09/2012

Instruction Memorandum No. 2012-059

Expires: 9/30/2013

To: All Washington Office and Field Officials

Attn: State and Field Engineers and Property Managers

From: Assistant Director, Business and Fiscal Resources

Subject: Real Property Additions to Capitalized Assets – Timeliness of Additions

DD: 3/30/2012, 6/29/2012, 9/28/2012

Program Area: Real Property Management

Purpose: This Instruction Memorandum (IM) re-enforces the importance of procedures and requirements for the addition of assets to the Finance and Business Management System (FBMS).

Policy/Action: All Bureau of Land Management (BLM) offices must ensure that assets to be capitalized are added to FBMS in a timely manner. In order to obtain a clean audit opinion as required by The Federal Accounting Standards Advisory Board (FASAB) Standard number 6, it is critical that real property forms and supporting documentation be submitted to the NOC Property Operations Section, OC-653, and that real property assets be entered into the real property records within 60 days of an asset being placed in service.

Based on the FASAB Standard identified above, a real property asset must be capitalized on its acquisition date. For real property assets that are constructed by BLM, the acquisition date is considered to be the in-service date, when it is ready to be used for its intended purpose or when the asset is actually being used for its intended purpose. The acquisition date of the property must be provided on the receiving documentation that is submitted to the National Operations Center (NOC), Property Operations Section, OC-653. The acquisition date determines the start of depreciation. Assets can be in service, for capitalization purposes, before the project or contract is complete. Assets acquired in methods other than construction, such as exchange or purchase, must be capitalized based on the date BLM takes possession of the asset.
The real property receiving process is described in Chapter 3 of the Real Property General Operating Procedures Handbook (H-1530-1), which can be found at: http://web.blm.gov/internal/wo-500/directives/dir-hdbk/h1530-1.pdf. The forms referred to in the Handbook can be found at: http://nbcweb.blm.gov/realproperty/forms.html.

In order to ensure that receiving documentation for constructed real property assets are submitted in a timely manner, a spreadsheet listing of outstanding projects will be posted on the Asset Management Sharepoint site beginning on or before February 17, 2012. All state engineers and property managers will be notified when the spreadsheet is available for update each quarter. State engineering staffs are requested to update the spreadsheet with the following information on a quarterly basis:

Status (percent complete)
Estimated completion date of the project
Estimated value of the completed project
Name of individual updating the spreadsheet
Date of the update

The fiscal year 2012 due dates for these updates are March 30, 2012, June 29, 2012, and September 28, 2012.

Timeframe: This IM is effective upon receipt.

Budget Impact: None.

Background: Financial Accounting Standards require that the BLM’s financial statements accurately reflect the value of capitalized assets within the BLM. Expenses can be inappropriately reported if property is not entered into the records in a timely manner. In addition, real property depreciates at a rate based upon its useful life. When real property is entered into the real property records late, then the BLM’s assets, expenses, and depreciation are misstated or misrepresented.

During the Fiscal Year (FY) 2011 audit, BLM received a Notice of Findings and Recommendations (NFR) focusing on the untimely additions of real property. Continued emphasis and attention is needed to ensure timely accounting for all new property assets and the efficient disposal of obsolete assets.

Manual/Handbook Sections Affected: BLM Manual 1530, Real Property Management, and BLM Handbook, H-1530-1, Real Property General Operating Procedures.

Coordination: This document was coordinated with the NOC Property Operations Branch, OC-653.

Contact: If there are any questions regarding the process for project completion and establishment of an asset within FBMS, please contact Andra Gerstenkorn, Section Chief, Property Operations, NOC, at 303-236-9403. If there are questions about accessing the spreadsheet or corrections to be made to the spreadsheet, please contact Tiffany Dashiell, Management Analyst, at 303-236-0505.

Signed by: Authenticated by:

Janine Velasco Robert M. Williams

Assistant Director Division of IRM Governance,WO-560

Business and Fiscal Resources