GASB 34
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  • Asset management is a business process and a decision-making framework that covers an extended time horizon, draws from economics as well as engineering, and considers a broad range of assets. The asset management approach incorporates the economic assessment of trade-offs among alternative investment options and uses this information to help make cost-effective investment decisions.   Asset management has come of age because of          changes in the transportation environment,          changes in public expectations, and          extraordinary advances in technology.   An Asset Management philosophy focuses on the benefits of investment, as well as its costs, and takes a comprehensive view of the entire portfolio of transportation resources. Asset Management is an improved way of doing business that responds to an environment of increasing system demands, aging infra-structure, and limited resources.  

GASB 34 GASB 34 Presentation Transcript

  • GASB#34 Asset Management TEAM Transportation Fair Presentation by: Charles J. Nemmers, P.E. October 8, 2004 St. Louis, Missouri
  • Today’s Presentation:
    • Define:
        • ”What is GASB#34 ? Why Should I Care?”
    • Why is it important
        • “ Why Worst First Is Worst”
    • Implement:
        • “ Asset Management”
  • GASB #34 What is it? Why should I care?
  • GASB
    • Government Accounting Standards Board
    • NOT a government agency
    • Sets standards for States and Local entities
    • Basis of audit opinions
  • #34
    • “Basic Financial Statements and Management’s Discussion and Analysis for State and Local Governments”
    • June 1999
    • Changed reporting from Optional to Required
  • GASB #34 Objective:
    • To make government accounting more like private sector accounting
    • Defined Infrastructure Assets
      • roads
      • bridges
      • water and sewer systems
      • drainage systems
      • dams, tunnels, ...
  • Asset Valuation: GASB #34
    • Requirements:
    • state and local agencies to include the value of physical assets in their financial statements
    • value based on depreciated historical cost, or historical cost without depreciation if the agency can demonstrate that they:
      • inventory their assets
      • assess every 3 years
      • spend funds sufficient to maintain at an established condition.
  • GASB #34 gives 2 options
    • 1) Depreciate
    • 2) Modified Approach
  • Modified vs. Depreciation Modified Depreciation Expense: Maintenance & Maintenance Preservation Capitalize: Additions and Preservation costs Improvements Additions & Improvements
  • GASB #34 recognizes that factors vary among jurisdictions and among infrastructure assets
  • In a Nutshell Governments generally don’t depreciate their assets and the private sector does, but now the rules have changed !!
  • Why “Worst First” is “Worst” Comments on how to build an effective public works infrastructure program
  • Worst First occurs because :
    • Easy to sell - lots of roads are in poor shape
    • Funding / budgets tilt toward new construction
    • No Ribbon Cutting
    • Deferred maintenance
  • But “Worst First”:
    • Costs more - 6X more
    • Drags the whole system down
    • Is difficult to recover from
    • Is a difficult concept to counter
  • Maintenance :
    • Routine
    • Reactive
    • Preservation / Preventive
  • Build:
    • Replace / Reconstruct (improve structural condition)
    • Expand / New Facilities (add new capacity)
  • Pavement Condition Optimal Timing Time/Traffic Rehabilitation Trigger Prevention Trigger Original Pavement
  • Current Condition I (0-2) III (8-12) II (3-7) IV (13-17) V (18-22) VI (23-27) (years) Pavement Remaining Life Categories From Michigan DOT -- Galehouse 19% 10% 40% 8% 6% 17%
  • Remaining Service Life Distribution State RSL average 8.32
  • Remaining Service Life Distribution County Average RSL 6.9
  • Ideal Condition I (0-2) III (8-12) II (3-7) IV (13-17) V (18-22) VI (23-27) (years) Pavement Remaining Life Categories 11% 18% 18% 16% 17% 20%
  • Remaining Service Life Distribution State
  • Remaining Service Life Distribution-Tooele County
  • Remaining Service Life Distribution-Tooele County
  • Reconstruction Strategy (25 Year Fixes)
  • Combined Reconstruct and Rehab Strategies (15, 20 & 25 Years Design Life)
  • Combined Reconstruct, Rehab, and Preventive Maintenance Strategies
  • Keys to Success (from MiDOT/GaDOT):
    • Promote Preventive Maintenance Philosophy
    • Fix pavements BEFORE they are broken-select good pavements for treatment
    • Budget & fund Preventive maintenance
    • Shorten the time between assessment and maintenance
    • Build them excellent the first time
  • “ Asset Management” to meeting GASB #34 using the Modified Approach
  • Asset Management
    • What is it?
    • Improved way of doing business
    • Draws from economics & engineering
    • Focuses on benefit of investment
    • Shows How, When & Why resources were committed
    • Planning tool
  • Asset Management
    • Inventory assets
    • Condition assessment
    • Value Assets
    • Performance prediction
    • Alternative / Decision analysis
    • Monitor and feedback
  • Condition Survey
  • Condition Assessment
    • .
  • RSL of 0
  • RSL of 8
  • RSL of 20
  • Pavement Performance Curve * Terminal Serviceability Lowest Annual Resurfacing Cost (Rehabilitation Treatments) Preventative Treatments
  • Network Performance Objectives (Recommendations) State Network Interstate +12 Years 5% or less +15 Years 3% or less Percent Requiring Reconstruction Average RSL Arterials/Major Collectors (NHS and High Volume Roads) Major Collectors (Low Volume) and Minor Collectors + 10 Years 5% or less No more than 5% 10 Year(min.) Local Roads and Streets
  • Needs Assessment County and City Networks
  • Routine (reactive) Maintenance
  • Preventative Maintenance
  • Rehabilitation
  • Reconstruction
  • Predicted 10 Year RSL Average- Heber City
  • Thank You Charlie Nemmers