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Reporting Requirements for Annual Financial Reports of State Agencies and Universities

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Reporting Requirements for Annual Financial Reports of State Agencies and Universities

Capital Assets

Impairment of Capital Assets and Insurance Recoveries
Reporting Impairment Amounts in the AFR and in USAS

In the AFR and in USAS, report the total impairment losses as determined by the impairment method calculation. This amount must match the amount reported in SPA for the fiscal year.

Report the total loss as outlined below:

  • On the government-wide statement of activities — As a program expense, special item or extraordinary item.
  • On the statement of revenues, expenses and changes in net position — As an operating expense, special item or extraordinary item (if the impairment loss occurs in a proprietary fund).

Note: If the impairment loss occurs in a governmental fund, do not report it on the fund financial statements — report the impairment loss only on the government-wide statement of activities.

Use the following table for assistance in determining the appropriate COBJ to use in recording impairment losses in USAS.

Question If yes, then… If no, then…
1. Is the loss unusual in nature? Also ask: Is the loss infrequent in occurrence?
  1. If also yes, report the loss as an extraordinary item with COBJ 7857.
  2. If no, proceed to question 2.
 Also ask: Is the loss infrequent in occurrence?
  1. If also no, report as an expense with COBJ 7855.
  2. If yes, proceed to question 2.
2. Is the loss within management’s control? Proceed to question 3. Report the loss as an expense with COBJ 7855.
3. Is the loss significant? Report the loss as a special item with COBJ 7856. Report the loss as an expense with COBJ 7855.

The COBJ determination, as explained above, is also depicted in the graphic below.

COBJ determiniation

For more information on the correct COBJs and roll ups to use to record impairment losses in USAS, see Impairment and Insurance Recovery COBJs and Roll Ups.

Disclose each impairment with a general description and amount of the loss in Note 2. At the end of each fiscal year, the Comptroller’s office analyzes all the agencies’ asset impairment data and determines which events (per GASB 42) are significant enough to include in the state’s ACFR.

All the impairments the agency deems significant to its own operations, that have been reported to SPA and are included in the agency’s AFRs, might not appear in the ACFR.