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Managing Capital Assets Who is responsible for the development and review of

Continued from page 10 processes and procedures to ensure the district’s assets are
accounted for consistently and accurately?
Who is responsible for day-to-day asset recordkeeping that
Government auditing standards require the auditor to could involve a purchase or the disposal of an asset?
consider internal control over financial reporting. Who is responsible for managing significant construction projects?
“An auditor must report deficiencies in internal control, If more than one person is involved, are they communicating?
Kirk said. “ A deficiency exists when the design or operation Who is responsible for the reconciliation of asset additions
of a control does not allow management or employees – in to expenditures? USFR (Uniform System of Financial Records)
the normal course of performing their assigned functions – requires that this be done at least annually. Who reviews this?
to prevent, or detect and correct, misstatements on a timely Who is responsible for performing physical inventories? At
basis. minimum, it should be performed every three years. Be aware that
“Material weakness is a deficiency or combination of the federal government requires such inventories every two years.
deficiencies in internal control, such that there is a reasonable Who is responsible for reconciling the results of the physical
possibility that a material misstatement of the entity’s financial inventory to the system asset records?
statements will not be prevented, or detected and corrected on Godley asked whether it is a shared responsibility. “If you
a timely basis. have the luxury of more than one employee, separation of
“A significant deficiency is a deficiency or combination of duties is essential,” she said. “It’s important to reconcile what
deficiencies in internal control that is less severe than a material you find and what you don’t find. A key question is: how many
weakness, yet is important enough to merit attention by those people are responsible?”
charged with governance.” Kirk raised another query: “To capitalize or not to capitalize
It’s also important to define responsibilities and make sure an asset – that is the question. The answer – it depends.”
they have been clearly communicated to your employees. Kirk
posed these questions: Continued on page 14

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12 THE EDGE | SPRING 2019