Effective: April 1, 1998
Responsibility: Vice-President and Chief Financial Officer
The procedures and guidelines are designed to assist managers in carrying out their responsibilities pertaining to the control and management of assets. This includes the timely recording of transactions related to cost, amortization, acquisition, write-off, transfer and disposal of assets, and the physical identification and verification of such assets.
It is the ultimate responsibility of management to implement adequate policies, procedures, guidelines and controls to ensure that assets are safeguarded and controlled in an efficient and effective manner against theft and/or loss.
3.1.0 Capital Asset
A capital asset is defined as one, which is of a durable character with a useful life covering more than one accounting cycle.
The CICA Handbook refines this definition further by applying all of the criteria listed below. Capital assets are identifiable assets which:
- Are held for use in the production or supply of goods and services, for rental to others, for administrative purposes or for the development, construction, maintenance or repair of other capital assets;
- Have been acquired, constructed or developed with the intention of being used on a continuing basis; and
- Are not intended for sale in the ordinary course of business.
A capital intangible asset includes those items without bodily substance, such as goodwill and leasehold improvements, exclusive of capitalized removable assets, which have been established by the Corporation.
3.1.1 Subsequent Capital Expenditures
Expenditures on additions, improvements, extraordinary repairs and replacements of parts of the whole, which enhance the output or service capacity or potential of a capital asset and termed as "betterments" by the CICA Handbook, will be capitalized i.e., added to the asset's value. The cost incurred in the maintenance of the service potential of a capital asset is a repair, not a betterment, and such costs will be charged to operations. Service potential may be enhanced when there is an increase in the previously assessed physical output or service capacity, when associated operating costs are lowered, when the life or useful life is extended or when the quality of output is improved.
Expenditures, which are capitalized, will be entered into the capital asset records and the cost of the replaced part/component removed (i.e. written-off). If such cost cannot be identified with the specific asset, the expenditures of such replacement part/component will become a charge to operations and the original value(s) of the replaced part(s) will continue to be amortized as previously.
3.1.2 Capitalization Limit
The normal business practice is to establish a dollar limit and/or minimum years of useful life below which expenditures will not be capitalized. This limit ($5,000 effective April 1st, 1993), which is reviewed and adjusted/re-confirmed every five years, is set and deemed by the Corporation to be an administratively feasible cut-off point where assets having laid-down cost in excess of this amount are required to be individually capitalized, recorded and controlled in accordance with established procedures and guidelines.
Laid-down cost will include the basic gross cost (i.e. excluding any proceeds from sale/trade-ins), shipping charges, all federal taxes including import duties, excise taxes, (but excluding GST), provincial taxes and any other charges included in the invoice. GST will be reflected as a working capital item and not included in the laid-down costs of purchased assets. When additional charges such as shipping expenses are separately billed and are difficult to identify with the specific asset, such charges need not be considered as part of the laid-down cost, in respect to the capitalization limit.
The procedures and guidelines pertaining to capitalization limit and laid down costs also apply to projects managed by individual components such as the installation of computer, telephone and other communication networks.
There are two exceptions to the capitalization limit, one is for Class 1000 - Land and the other for Class 10000 - Works of Art. Regardless of the value, all acquisitions of Land and Works of Art are to be capitalized, recorded and controlled in accordance with the established procedures.
3.1.3 Non-Corporation-Owned Assets
Expenditures on non-corporation-owned assets or service extensions to property, such as water-sewer connections, power, telephone and broadcast circuits to which the Corporation does not have title will be amortized 100% as per Appendix A.
3.1.4 Project Capitalization Process
The capitalization process is a function whereby compiled project costs are summarized and transferred to an appropriate general ledger asset account from work in progress. All costs will be capitalized and recorded in the general ledger upon receipt of the asset in the case of acquisitions with an account assignment "A" (for Asset). In the case of acquisitions with an account assignment "P" (for Project), the costs will be capitalized upon completion of the project or the date the asset is placed in production. Direct labour and miscellaneous costs will be allocated to the assets in the project based on reasonableness, materiality and the best information available.
Some project assets cannot be capitalized or put into production until the project is complete (buildings, transmitters, master controls, etc.). For these assets, direct labour and miscellaneous costs will be assigned to the total cost of the individual assets upon completion of the project.
The costs associated with project assets, which cannot be capitalized until completion of the project (buildings, transmitters, etc.), will be recorded in work in process at the end of the fiscal year.
3.1.5 Assets Below the Capitalization Limit (BCL)
BCL assets within a project can be funded either through the Capital Vote or the Operating Vote in accordance with established rules, procedures and guidelines for the capital process. As a general rule, BCL assets, which are an integral part of the approved project, will be funded from the Capital Vote, while stand-alone BCL assets will be normally be funded from the Operating Vote.
3.1.6 Spare Parts
The purchase and installation of new equipment may be accompanied by the purchase of a supply of spare parts. The procurement of such spare parts is a management decision, having regard to operating requirements, the perceived need for future supplies, etc. The original cost of such spare costs will be capitalized, charged against the Capital Vote and amortized 100%.
3.1.7 Discontinued Engineering Projects
When previously approved capital projects are discontinued and there are capital assets in such projects, such assets will be transferred to other projects while all remaining costs will be amortized immediately - 100% and charged against the Capital Vote.
3.1.8 Capital Lease
Capital leases are leases, which transfer substantially all the benefits and risks incident to ownership of property to the lessee. The presence at the inception of the lease of one or more of the following conditions renders a lease a capital lease:
- The contract calls for the ownership title to vest in the lessee by the end of the lease term.
- The contract contains a purchase option in favour of the lessee and the following conditions exist:
- There is reasonable assurance at the inception of the lease that the option will be exercised.
- The option to purchase price must be sufficiently lower than the expected fair market value at the date the bargain purchase option is exercisable. (Fair market value is the selling price in an arms-length transaction.)
- The term of the lease covers 75% or more of the useful life of the leased property, based on the Corporation’s amortization rates for similar assets.
- The present value of the minimum lease payments at the beginning of the term, including guaranteed residual values, but excluding executory costs and interest, equals 90% or more of the fair market value of the leased property at the inception of the lease.
4.1 CORPORATE FINANCE AND ADMINISTRATION
At the corporate level, the principal role is to establish the accounting and policy requirements as well as the procedures, guidelines and controls in regard to financial and physical control of assets and to oversee and monitor the application of those policies, procedures, guidelines and controls. The Director, Policy and Internal Control is responsible for carrying out these functions. The responsibilities include:
- Determining corporate accounting and other requirements with due regard to:
- Federal, provincial and local statutes
- The need to satisfy the demands of Treasury Board, the Comptroller General, the Minister, the Office of the Auditor General (OAG), the Public Accounts Committee, etc.
- The generally accepted accounting principles (GAAP) promulgated by the Canadian Institute of Chartered Accountants
- Developing essential policies, guidelines, standards and procedures to ensure:
- General awareness of the corporate accounting requirements
- Uniformity of application
- Ensuring that adequate systems are in place to monitor, control, safeguard and manage assets.
- Monitoring network and regional accounts, other records and management programs to ensure compliance with corporate requirements as expressed through policies, guidelines and procedures.
4.2 ACQUISITION OF ASSETS (CAPITAL AND NON-CAPITAL, INCLUDING OFFICE FURNITURE)
4.2.1 Finance and Administration - Supply Management
It is the responsibility of Supply Management to ensure that approvals for the purchase/acquisition of assets are in accordance with the DFA and DSA policies. The Supply Management department is responsible for the purchase/acquisition of all assets for the Corporation, including capital and non-capital assets on receipt of approval from managers, ensuring adherence to standards established by the Real Estate Services
for the purchase of office furniture.
In order to ensure that Attractive LVA as per Appendix D are captured and recorded in SAP, they must be processed through Supply Management departments, regardless of the dollar value. Such assets are not to be purchased through petty cash or production funds or by using ProCards.
4.2.2 Real Estate Services
Real Estate Services are responsible for establishing corporate standards pertaining to the purchase/acquisition of office furniture and for the communication of such standards to all levels of management, including Supply Management. Standards and criteria must be established taking into consideration ergonomics, comfort, price/quality ratio and the furniture’s flexibility to meet anticipated and/or future needs.
Real Estate Services must follow-up on warranties on national purchasing agreements to ensure that in the long run all work areas are coherently managed and comparable in regards to employee work areas.
Real Estate Services will work with Supply Management on the tendering process for national agreements for office furniture.
4.2.3 SNC-Lavalin O&M
When appropriate, and in order to take advantage of negotiated cost savings, Supply Management may sub-delegate/contract SNC-Lavalin O&M to purchase furniture on behalf of the Corporation. In such cases, Supply Management and SNC-Lavalin O&M must ensure that the proper approvals have been obtained from managers who have the responsibility and authority for such capital and operating projects. SNC-Lavalin O&M will not charge the Corporation administration fees associated with such furniture purchases.
4.3 MANAGEMENT AND CONTROL OF ASSETS
Each Senior Financial Officer of a network or region is responsible for ensuring that the required books of account and asset records are maintained in accordance with GAAP and Corporate policies and procedures. It is the responsibility of the Senior Financial Officer to certify the balance sheet and operating statements with respect to the capital asset values and related operating expense, which necessitates periodic inventory and audit to ensure proper identification and verification of the existence of the assets.
In particular, each Senior Financial Officer must ensure that the general ledger provides details of capital assets:
- Acquired from outside suppliers
- Constructed internally
- Acquired through approved projects
- Transferred to and from other locations
- Written off or written out
In the case of Non-Capital Tangible Assets, financial officers must ensure that managers are aware of their responsibilities pertaining to the management of assets, which includes providing information to managers on assets off CBC/Radio-Canada premises and Low Value Assets (LVA) falling below the capitalization limit.
Senior Network Financial Officers are additionally responsible for:
- Providing adequate support and reports relating to assets turned over to networks and regions upon completion of projects or major portions thereof
- Working closely with Corporate Finance and Administration to ensure communication, interpretation and consistent application of policy in the network and regional locations
- Reviewing, controlling and co-coordinating all proposed changes to the assets in SAP, including additions, transfers, write-offs, sales, trade-ins and disposals as submitted/proposed by the managers responsible, and have final approval over such changes. While individual managers are responsible for adding and deleting non-capital assets from SAP, Finance and Administration has sole responsibility for making changes in SAP for transactions pertaining to capital assets.
- Co-coordinating the physical inventory process
- Interpreting policies, procedures and guidelines, in consultation with the Director, Policy and Internal Control and communicates to managers
- Proposing changes and updates to policies, procedures and guidelines
- Communicating new and updated policies, procedures and guidelines to managers
Ensuring, in this context means that Finance and Administration will provide the tools and reports available from SAP, to assist managers in achieving this objective. While Network Finance and Administration assumes ultimate responsibility, Regional Finance and Administration will provide a supporting role when required and regional managers should contact the local Regional Comptroller for consultation, advice and guidance on issues such as policy interpretation, physical inventory of capital assets, transfers and write-off of capital assets, management of non-capital assets, etc.
4.4 PROJECT IMPLEMENTATION GROUPS (ENGINEERING, CTO, etc.)
Network engineering management is responsible for:
- Providing assistance in the preparation of the capital budget for the Corporation, including the provision of project estimates to the appropriate component. This is effected in conjunction with network/regional management and Corporate Planning
- Administering and supervising the construction and/or installation of capital projects, both individual units and composite systems, in line with approved budgets
- Safeguarding of assets under its jurisdiction
- Recommending and reviewing of standards for technical assets
- Providing assistance to Finance and Administration in forecasting year-end results for capital projects.
4.5 ASSETS AND/OR SERVICES PAID BY THE CORPORATION LOCATED OFF CBC/RADIO-CANADA PREMISES
GUIDELINES – ACCEPTABLE USE OF THE CORPORATION’S ASSETS/PAID SERVICES
Operational requirements may require CBC/Radio-Canada staff to work off CBC/Radio-Canada premises and as such be required to either work with and/or have access to CBC/Radio-Canada assets and/or paid services off CBC/Radio-Canada premises.
The following assets and services may be paid by CBC/Radio-Canada or reimbursed to the employee:
- One personal Computer (PC) or laptop with docking station.
- Access to CBC/Radio-Canada systems (i.e. SAP, Intranet, etc.)
- 50 % of one home internet service
- One cellular telephone
- One Blackberry or other PDA
The expenses for the following services will not be paid by CBC/Radio-Canada or reimbursed to the employee:
- Home cable service
- Home satellite service
- Printer for use at home (business or personal use)
- Personal subscriptions to, or purchase of, newspapers and magazines
- Service for car phones, TV phones, iPhone, etc.
- Flowers and charitable donations (except in cases already provided by corporate policy 2.3.13: Gifts, Donations and Other Contributions
It is the responsibility of individual managers to determine whether or not employees require the use of and/or access to CBC/Radio-Canada assets and/or paid services located off CBC/Radio-Canada premises. The following should be considered in making such decisions:
- Is the employee required to work outside of normal business hours?
- Is the employee required to travel on a regular basis for work?
- Does the individual manager or other CBC/Radio-Canada staff need to reach the employee on short notice and/or outside normal business hours?
- Is the employee required to be on call?
- Have special work-hour arrangements been previously agreed to for the employee?
Any asset or service to be paid by CBC/Radio-Canada or reimbursed to the employee, that may not be in accordance with the above must be approved in advance by the appropriate Vice-President or his/her delegate. Expenses approved by the Vice President's delegate must be reviewed and approved by the Vice President no later then the end of the following month.
It is the responsibility of individual managers to ensure that:
- The Corporation’s assets and/or services paid by the Corporation are used by employees primarily for CBC/Radio-Canada business
- The relocation of such assets off CBC/Radio-Canada premises are authorized in advance in writing and supported by appropriate documentation (a list of the individual assets, the asset bar code, and the address of the off premises location)
- Such assets are recovered from the employee when they leave the Corporation and that paid services are cancelled
- Adequate controls are in place to safeguard such assets.
- All such assets and/or services paid by the Corporation under their area of responsibility are inventoried and certified at least once a year
- If they manage such assets in SAP, that such assets are identified in the designated field as “OP”, which is the code to identify “Off Premises” assets
- All other low value attractive assets, as per the lists approved by Senior Management are managed and tracked in SAP – refer to list in Appendix D. (Note: it is the responsibility of the individual managers and not Finance and Administration to maintain input, update and delete the approved list of low value assets, however, if managers provide Finance with an approved Write-Off/Disposal form and a list of low value assets to be deleted, Finance will delete them.)
- The documentation pertaining to the inventory is made available on request for audit purposes
- A permanent form of CBC/Radio-Canada identification (bar code or LVA asset tag) is inscribed on each asset to identify it as CBC/Radio-Canada property
- Finance and Administration is advised in a timely manner of all transfers, write-off, trade-in, loss and disposal of all assets managed in SAP and located off CBC/Radio-Canada premises
Senior Management reporting directly to the President must Complete an annual disclosure form attesting to which assets, and/or services paid by the Corporation, which they use and/or have access to off CBC/Radio-Canada premises, and to the control they exercise over their own management for such assets within their components and submit such form to the VP & CFO who will ensure that a copy is sent to Human Resources to be maintained in their files, and a copy to Finance and Administration to update SAP.
Human Resources will ensure that such assets are recovered from the respective Senior Manager and any services paid by the Corporation are cancelled when that manager leaves the Corporation. When assets are recovered and services cancelled Human Resources will advise local Finance and Administration who will update SAP accordingly.
It is the responsibility of each Vice Presidential component to ensure that all employees under their area of responsibility complete the disclosure form and each respective manager will be responsible for recovering such assets from employees reporting to them when they leave the department and/or Corporation. With the exception of the disclosure forms for Senior managers reporting directly to the President, copies of all forms should be sent to the Senior Finance and Administration Officers in their respective Network/Region/Location, who will forward such copies to their respective Network Finance and Administration office in order to update SAP.
4.6 SENIOR MEDIA AND SUPPORT MANAGEMENT
The senior media and support management are responsible for:
- Establishing the Business Rules pertaining to the management of assets
- Establishing the lists of the types of Low Value Assets, which they want their managers to track and manage in SAP
4.7 NETWORK AND REGIONAL MANAGEMENT
Network and regional management are responsible for the safeguarding, systematic maintenance and efficient use of the assets entrusted to their care, for ensuring that corporate policies and procedures are followed, and for communicating relevant information to the Senior Financial Officer. More specifically their duties include:
- The identification and tagging of all capital and deemed attractive assets
- The provision of security arrangements to safeguard the Corporation against loss through theft or misuse of its assets
- Taking a regular inventory of assets to confirm that they exist and continue to represent a value which will contribute to the operation of the Corporation
- Maintaining records of audit quality for assets deemed to be attractive and of a non-capital nature
- Assisting Finance and Administration by communicating changes related to an asset, which would normally result in a modification to the asset records (i.e. purchases, trades, sales, transfers, write-offs and disposals)
It is the role of Finance and Administration to assist network and regional managers in fulfilling this obligation.
5.1 GENERAL PRINCIPLES
Amortization is a generic term for depreciation, depletion, or write-down of a limited-life asset or group of assets. Amortization implies a reduction in the service capacity of an asset through use, obsolescence or inadequacy. Whatever the term used, the end result is the same, i.e. the charging to the annual cost of operations of an amount representative of the reduction in service capacity of the assets. In certain instances the charges can be 100% in a given year.
In accordance with G.A.A.P, expenditures for capital assets are required to be allocated to each accounting period for the estimated useful life of the asset. Such allocations are termed amortization. To simplify the amortization processes, and for the provision of suitably detailed information, capital expenditures are classified in the general ledger by account and class. See Appendix A.
5.2 AMORTIZATION RULES
- Amortization on capital assets will commence in the first month following the month of receipt or, in the case of work orders, in the month in which the project assets are capitalized or placed in production
- Amortization rates are to be applied to the original cost of assets and used on the "straight-line" method of calculation, as indicated in Appendix A
- Amortization is a non-budgetary item, which does not impact on parliamentary appropriations and will be identified as such in the general ledger
- Amortization expense will be accounted for monthly in the books of account using the appropriate account/cost centre and amortization rate
5.2.2 Capital Assets Transferred Between Locations
- Amortization expense for the month in which the asset was transferred will remain in the transferring location and the recipient location will be responsible for the amortization expense from the following month onward
- Accumulated amortization to the end of the fiscal month during which the transfer takes place will be transferred to the recipient location
5.2.3 Capital Assets Written-off/Retired
Both the original cost and accumulated amortization will be removed from the books of account and charged to the appropriate cost centre. In the month of the write-off/retirement, any difference between the original cost and the accumulated amortization will also be charged against the appropriate cost centre. For details regarding the accounting for write-offs see Section 11 – Accounting process.
5.3 AMORTIZATION ACCOUNTS
All capital assets will be amortized using the accounts established in the general ledger and in accordance with the accounts and class indicated in Appendix A.
The Director, Corporate Reporting at Head Office is responsible for maintaining these accounts.
5.4 MONTHLY AMORTIZATION EXPENSE
Monthly amortization expense will be calculated and assigned to the appropriate cost centres based on the information provided for the asset account and class. The accumulated amortization will be automatically updated by the reporting system.
5.5 REVIEW OF AMORTIZATION RATES
The amortization method and estimates of the useful life of assets should be reviewed on a regular basis and at lease once every five years.
Factors to be considered in estimating the useful life of assets include the following:
- Expected future usage;
- Effects of technological or commercial obsolescence;
- Expected wear and tear from use or the passage of time;
- The maintenance program;
- Results of industry studies and practice;
- Studies of similar assets retired;
- The condition of existing comparable assets.
Significant events that may indicate a need to revise the amortization method or estimates of life of assets include:
- A change in the extent the asset is used;
- A change in the manner in which the asset is used;
- Removal of the asset from service for an extended period of time;
- Physical damage;
- Significant technological developments;
- A change in the law, environment, or consumer styles and tastes affecting the period of time over which the asset can be used.
Financial and physical control requirements demand that the capital asset records be kept up to date with regard to the physical location and responsibility for all capital assets. Movements of assets from one location to another, and/or from one responsibility centre to another must be recorded on a timely basis. The "location" generally refers to region, location and building. Physical movements of assets must be communicated to the applicable network/regional senior financial officers on the appropriate forms.
Temporary movements of capital assets for emergencies or special events (such as the Olympics) are not required to be transferred between cost centers in SAP as they will be eventually returned to the original location, unless for physical control purposes, such as assets located off premises. Finance and Administration must, however, advise the CBC/Radio-Canada insurance department to ensure that such assets will be covered by CBC/Radio-Canada insurance.
Individual managers are responsible for reporting the transfer of assets to the network Finance and Administration offices, who will ensure that the asset records are updated on a timely basis
Generally Accepted Accounting Principles require that capital assets, which have been traded-in, stolen, lost, or are of no further use due to obsolescence, wear and tear, damage or any other cause, must be removed from the Corporation's books of account. The accounting treatment may differ, depending on the reason for the removal and is explained below.
The Corporation's procedures with regard to the write-off/retirement of capital assets, excluding real property, are as follows:
- Assets which have been traded-in, stolen, lost, or are of no further use due to obsolescence, wear and tear, damage or any other cause, are to be removed from the general ledger and disposed of, as soon as their unusable status is recognized
- The officer having custody of an asset and who is responsible for its care and maintenance must initiate/approve the write-off/retirement procedure
- All requests for write-off/retirement of assets are to be submitted on the Assets Request for Write-off/Retirement and Disposal form
- Recommendation and approval authorities are to be in accordance with formal specific delegated financial authorities
- On receipt of a properly authorized request for write-off/retirement, the network/regional Senior Finance and Administration Officer will process the necessary entries to delete the asset record, cost and accumulated amortization from the accounting files and records
7.2.1 Approval – Write-offs
The manager responsible for the management of the asset must submit requests for write-off approval to the appropriate Network Finance and Administration manager or to his/her delegate as identified in the Functional Delegation of Financial Authority, with a copy to the appropriate Regional Finance and Administration Officer. Only officers with Functional Financial Authority will have the authority to write-off/remove assets from the General Ledger/SAP.
Supplementary approval by the Vice President and Chief Financial Officer and/or his/her delegate is required for write-off of assets with a net book value of $50,000 or more.
All write-offs of real property (Land and Buildings) must be approved by the Real Estate Services.
NON-CAPITAL (ATTRACTIVE) LOW VALUE ASSETS (LVA)
The individual manager responsible for the management of the asset will have the authority to delete such assets from SAP, however, if managers provide Finance with an approved Wrire-Off/Disposal form with a list of low value assets to be deleted, Finance will delete them.
Section 7.2.2 - Electronic Request/Approval to Write-Off Assets
Approval to write-off assets may be processed/requested by e-mail. The following process must be followed:
- An e-mail from the appropriate managers with DFA who are responsible for the asset must be sent to the designated Finance and Administration Officers in Toronto and Montreal.
- The e-mail should indicate the name of the manager, his/her title, Location/Province & phone #.
- The e-mail should have two documents attached:
- A detailed listing of the assets to be written-off. Preferably the list should contain all the information on the assets in SAP (i.e. download
the info from SAP and create a separate listing) or as a minimum, the following information would be required:
- Asset tag #
- SAP #
- Asset description
- Location #
- Cost center #
- Original cost
- Accumulated amortization
- An electronic copy of the Assets Write-Off form as per Appendix E of the Assets Policy - There must be an approved Asset Write-Off
form for all asset write-offs and the form should refer to an attached detailed list of the assets to be written off, as indicated in 3 a) above.
- A detailed listing of the assets to be written-off. Preferably the list should contain all the information on the assets in SAP (i.e. download
The information required on file in Finance for audit purposes is:
- The Asset Write-Off form referring to the detailed list
- The e-mail approving the write-off, attached to the write-off form
- The detailed list of the assets to be written off, attached to the write-off form.
FINANCE AND ADMINISTRATION
As the designated disposal agents for the Corporation, the Supply Management Officers have the ultimate authority and responsibility for the disposal of all assets of the corporation, when the disposal involves a sale or trade-in. In all other cases, the manager responsible for the asset can approve the disposal. Supply Management will consult with and involve the appropriate components in the disposal of assets under their area of responsibility. The Real Estate department must be consulted for the disposal of office furniture and equipment assets, removable building equipment and fixtures and Works of Art to determine whether such assets can be used in other CBC/Radio-Canada locations/departments.
REAL ESTATE SERVICES
Real Estate Services will work with and assist the Supply Management Officers in the disposal of CBC/Radio-Canada assets.
All disposals of real property (Land and Buildings) will be negotiated, processed and approved by the Real Estate Services.
While the Supply Management Officers are ultimately responsible for the disposal of assets, they may engage SNC-Lavalin O&M in the actual disposition of such assets. All proceeds from disposal, net of disposal costs and/or authorized commissions or administrative fees, must be credited to the Corporation as indicated in Section 8 – Proceeds.
- As all assets are assigned to responsibility cost centers, the responsibility and ownership of assets can be obtained/verified from SAP
- Before assets can be disposed of by the designated disposal agent, they must be written-off in accordance with policy
- Since many assets may contain electronic data pertaining to CBC/Radio-Canada proprietary and/or confidential information, it is the responsibility of the appropriate manager to send all such assets to the local IT department to ensure that all such information is cleared/deleted from the asset prior to the sale, trade-in, donation, scrap/recycle, write-off and disposal of such assets.
- A Disposal Report must be completed by the designated disposal agent upon disposal of the asset to confirm the method of disposal and the amount of any proceeds, which includes trade-in values. The disposal report will also confirm that all electronic data pertaining to CBC/Radio-Canada proprietary and/or confidential information, has been cleared/deleted from the asset.
- Donations of surplus capital assets to outside organizations with a net book value in excess of $50,000, must be approved by the respective Vice President, while donations with a net book value below $50,000 will require approval one level below the Vice President. Donations with a net book value in excess of $100,000, require the supplementary approval of the Vice President and Chief Financial Officer. As all property of the Corporation is the property of Her Majesty, all such donations should be kept to a minimum.
- The disposal of capital assets involving a consideration in excess of $4,000,000 requires the prior authorization of the Board of Directors and of the Governor in Council.
Under no circumstances should managers offer employees the option to keep assets (PCs, laptops, printers, etc.) as a part of their settlement package for leaving the Corporation. If employees want to purchase assets, the assets must be deemed to be surplus to the Corporation and must also be evaluated by Supply Management to determine the value for the purpose of the sale. In the case of sales to employees, Managers should not deal with employees directly, but should consult with Supply Management as well as local Finance and Administration.
Before assets can sold, traded-in, donated, scrapped, etc. the manager of the department responsible for the assets must confirm/declare that such assets are surplus to the department. In order to do this, the manager has to canvas all managers within his/her department to determine whether such assets can be used by other employees. If the assets cannot be used within the department, the manager should also canvas other departments within the Corporation to determine whether they can be used by these departments. Purchasing may be called on to assist in this exercise.
If there are no requirements for these assets within the Corporation, the assets are determined to be surplus and must be disposed of in accordance with Policy. The official Disposal agents for the Corporation are the Purchasing agents/Buyers located in Montreal and Toronto. Normally surplus assets are disposed of through the Crown or companies with which we have agreements to dispose of such assets. In some cases, we may offer employees the opportunity to purchase assets and in such cases, the following steps must be followed:
- Purchasing has to establish an estimate of the value of the assets to be offered for resale
- Purchasing must then offer the assets to all employees within the location the opportunity to bid on/buy the asset
- The assets will be sold to the employee offering the highest bid
- Before releasing assets to employees, the employee must pay for the asset in advance through local Finance, who will provide a receipt, which must be presented when claiming possession of the assets
8.1 SALE/TRADE-IN – CAPITAL ASSETS
Proceeds can be in the form of cash from a direct sale or from the value received from a trade-in of an asset. In the latter case, two transactions are effected, the acquisition of the new asset using the gross cost and the sale of an asset involving proceeds equal to the trade-in allowance and cash. All proceeds, net of disposal costs and/or authorized commissions and administrative costs, will be used to augment the capital budget.
In cases where Supply Management has delegated authority and/or contracted Profac to assist in the disposal process, Profac may receive a commission and/or administrative fee, only if it is approved in advance by Supply Management. Such commissions and/or fees will be offset against the proceeds for revenue purposes.
All net proceeds from the sale/trade-in of capital assets will be recorded under the appropriate WBS element under Project number M717344 and account 48303 controlled by Head Office.
Trade-in allowances are to be treated as proceeds from sales and not as reductions of the purchase price of new assets.
With the exception of proceeds from the sale or trade-in of assets originally purchased by a Specialty service, which must be credited to the Specialty service, all net proceeds will be credited to the Corporate Reserve, regardless of the amount.
8.1.2 Sale/Trade-in – Non-Capital Assets
- Proceeds from the sale/trade-in of non-capital assets, net of disposal costs, will be credited as miscellaneous revenue to the cost centers of the individual components who is responsible for the management of the assets. The Asset Disposal Form must be used.
- If the proceeds are immaterial in value and cover assets from many departments, such proceeds will be credited as miscellaneous revenue against the local cost center of the Plant Manager or the support department component
- Proceeds are not to be credited/offset against expense accounts
- All proceeds must be paid by cash, certified cheque or credit card, payable in advance before the asset is released
- In cases where Supply Management has delegated authority and/or contracted Profac to assist in the disposal process, Profac may receive a commission and/or administrative fee, only if it is approved in advance by Supply management. Such commissions and/or fees will be offset against the proceeds for revenue purposes.
8.2 INSURANCE CLAIMS
Insurance proceeds arising from damage to capital assets will be processed in accordance with Corporate Policy 2.3.12 – General Accounting and Reporting Guidelines. Insurance proceeds from loss of or damage beyond repair to capital assets will be accounted for as if a sale had taken place.
When it becomes known that a capital asset has been lost or stolen, the manager responsible for the asset is required to report the loss to the Corporate Risk Management Officer, Head Office, using form CBC/Radio-Canada 1091 Report of Missing Property or Equipment.
The term "write-out" refers to the accounting process of removing from the general ledger/SAP, details of assets, which could not be physically located or were duplicated.
Write-out is not to be confused with the term "write-off" which is used when capital assets are removed from the records because of sale, trade-in, obsolescence, lost or stolen.
The net gain or loss resulting from the disposal of a capital asset which has been traded-in, stolen, lost, or are of no further use due to obsolescence, wear and tear, damage or any other cause must be reflected in the general ledger by recording the original cost of the asset, the accumulated amortization and the proceeds.
The responsibility for originating the write-off/retirement and obtaining the proper approvals lies with the manager responsible for the asset.
The un-amortized balance will be recorded and reported in accordance with the appropriate guidelines and principles.
11.2 ASSET TRANSFER AND WRITE-OFF FORMS
These forms must be downloaded into an Excel file, completed, saved, and sent directly to the designated network Finance and Administration manager.
Physical control of capital assets is maintained through periodic identification and verification of the existence of each asset recorded in the general ledger. Such periodic identification and verification is also required to certify the capital assets value on the Corporation’s Balance Sheet.
12.2 PHYSICAL VERIFICATION OF ASSETS
- Capital assets will be physically identified to confirm their existence at least once every five (5) years. This task may be performed on an annual progressive basis, with a portion of the total inventory identified and verified each year. The responsibility and discretion for the timing, sequence, identification and verification of assets lies with network/regional management
- Network/regional Senior Financial Officers have a functional responsibility to assist management in carrying out this function. They will ensure that current lists of assets are provided to managers who will take appropriate action with respect to follow-up and the resolution of discrepancies between physical inventories and records. This will include the verification of asset files, communication with other networks/regions, reviewing records of previously written-off capital assets, initiation of write-off requests and transfer forms and the adjustment of the capital asset records
- It will be at the discretion of the Senior Financial Officer at each location to determine whether random checks are to be conducted on the work performed by the persons actually doing the inventory. The scope and depth of such checks will be determined by the Senior Financial Officer.
Low Value Assets (LVA)
The following LVA, which are required to be tracked and managed in SAP, will be physically identified annually to confirm their existence:
- Assets listed in Appendix D of the Assets Policy
- Assets off CBC/Radio-Canada premises, some of which may be included under the list in Appendix D
For all other LVA, other than those listed in Appendix D and LVA off CBC/Radio-Canada premises, there is no requirement to physically verify such assets, either annually or once every five (5) years.
12.3 ACCOUNTING FOR DISCREPANCIES
12.3.1 Capital Assets on Hand but not Recorded
If follow-up procedures described above are unsuccessful in identifying assets located but not on the official lists, the following steps are required to enter the record in the capital asset files:
- The make, description and approximate age of the assets must be established, with the assistance of technical, engineering or other expert personnel if necessary
- The capital asset files should be examined to ascertain whether it contains reference to an asset of the same, or approximately the same, make, model, and age
- If these enquiries result in a similar asset being located, then the accounting records relating to it will provide a useful guide to the setting up of a realistic "original cost" for the asset in question. If, however, no similar asset can be traced, then the "original cost" must be estimated, preferably with input from engineering, technical or other expert personnel
- When the "original cost" has been established, the amortization rate should be in accordance with Appendix A
- The asset record can then be entered into the capital asset files and recorded in the general ledger against the appropriate cost centre. It will be assumed that this re-instatement is a reversal of a previous write-off/retirement
12.3.2 Duplicated Records of Capital Assets
When it becomes apparent that the accounting entries relating to a capital asset have been duplicated, the assumption to be made is that the duplicated record was added to the accounting records. This situation is to be corrected by preparing an entry, using amounts for original cost and accumulated amortization as reflected in the capital asset files. This is referred to as a write-out.
12.3.3 Capital Assets Recorded but not Located
13. SOURCE OF CAPITAL FUNDING
The main sources of capital funding include the following:
- Parliamentary Appropriations
- Proceeds from sale and/or trade-in of assets
- Proceeds from insurance claims
Asset tags are printed with bar codes. Where possible, the tags will be attached to assets by the people who are familiar with the assets and who can best decide the most appropriate location. Finance and Administration will provide the tools required to scan the bar codes on all Capital Assets and Non-Capital Assets recorded in SAP.
Each Network will determine the unique bar codes and numbering structure for their areas of responsibility.
(Includes Assets off CBC/Radio-Canada Premises)
- As a general rule, capital assets must be processed through Supply Management. Purchases of Real Estate will be negotiated and processed by the Real Estate Services
- Supply Management and Shipping and Receiving departments will capture all the information required to track, record and manage capital assets in SAP (i.e. make, model, serial #, etc.). Shipping and Receiving will affix a bar code upon receipt of the asset and update SAP
- Standard descriptions for each class of assets must be used
- It is the ultimate responsibility of managers to ensure that all the required information is provided to Finance and Administration, including the assignment of the bar code if the Purchasing or the Shipping and Receiving departments did not obtain it
- Managers are responsible for the tracking and management of such assets under their area of responsibility
- Managers are responsible to ensure that capital assets are physically verified / inventoried at least once every five years
- The manager responsible must approve transfers, write-offs and disposals and process them through Finance & Administration using electronic forms on the Intranet. Local Finance & Administration should be copied on all correspondence on transfers and write-offs, including assets on and off CBC/Radio-Canada premises
16. BUSINESS RULES AND GUIDELINES - NON-CAPITAL - LOW VALUE ASSETS (LVA) (Includes Assets off CBC/Radio-Canada Premises)
- Media and Support management will establish lists of non-capital assets to be tracked and managed by all managers under their area of responsibility in SAP (see Appendix D). Where SAP is used to track and manage such assets, managers should be aware that, if they input non-capital assets in SAP, they must also remove them when required
- In order to assist in the tracking and management of non-capital assets, managers should use the Supply Management department in the purchase of such assets. Managers will determine which low value assets will be bar coded, tracked and managed and will advise Supply Management when they submit their “Request to Purchase”
- Shipping and Receiving departments will endeavor to capture all the information required to track, record and manage non-capital (attractive) assets in SAP (make, model, serial #, etc.). However, it is the ultimate responsibility of managers to capture all the required information if not obtained by Shipping and Receiving, including the assignment of the bar code
- The physical verification of LVA will be in accordance with section 12.2.
- Managers must control transfers and disposal of such assets. The electronic Transfers and Write-off forms in Appendix E are also to be used for non-capital assets.