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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

Assets Held in Trust

Capital assets held by an agency on behalf of a non-state entity (such as art collections owned by families, estates and others) and under the temporary control of the agency must be accounted for in SPA. This includes all assets owned by the federal government that were loaned to the agency. The following chart explains the treatment of common scenarios with assets held in trust.

Scenario Description Report Depreciate Applicable GASB Standard
Equipment or historical treasures “loaned” to the state Capital assets held by the state on behalf of a non-state entity and not used in agencies’ operations. For example:
  • Art collections owned by families, estates and others
  • Assets owned by the federal government loaned to the state for display
Assets held in trust and not used in operations are reported by debiting GL account 0435 and crediting GL account 1400.		 Yes, these assets are reported in the financial statements. Assets held for others are reported in custodial funds (fund type 22), except for universities (report in fund type 05). No Comptroller Policy
If used in agency operations. Report as an appropriate asset and depreciate if depreciable. Yes GASB 34 and Related Pronouncements
Assets donated – government’s intent is to keep the asset GASB 33 – A voluntary nonexchange transaction entered into willingly by two or more parties. A voluntary contribution of resources between state agencies is not a donation. Yes – different requirements for different fund types. Yes GASB 33
Assets donated – government’s intent is to sell the asset GASB 33 – A voluntary nonexchange transaction entered into willingly by two or more parties. A voluntary contribution of resources between state agencies is not a donation. Yes – different requirements for different fund types. No GASB 34
GFOA Bluebook
Capital assets purchased with federal grants/awards – federal government retains a “residual interest” in the asset
  • Equipment purchased by the state with federal funds where the federal government retains a residual interest in the equipment.
  • The state uses the equipment in its operations (activities) and makes the decisions on when and how the asset will be used and managed.
 		 Yes – the historical cost of these assets is reported in the state or local government’s statement of net position. The agency reports a cash inflow and federal revenue and a cash outflow with the asset. Include depreciation expense for these assets in the expenses for the function that uses the assets. Yes GASB 34 and Related Pronouncements
Capital assets purchased with federal grants/awards – federal government retains or is silent on the “ownership/title” to the asset
  • Equipment purchased with federal funds by the state where the federal government retains ownership of the equipment per the grant/award.
  • The state uses the asset in its operations and makes the decisions on when and how the asset is used and managed.
  • According to the grant/award, equipment must be returned to the federal government at the completion of the grant/research.
  • As a matter of practice, even if the contract doesn’t state explicitly that the asset belongs to the agency, the asset is usually retained by the agency. Thus, it is capitalized and depreciated.
 		 Yes – the historical cost of these assets is reported in the state or local government’s statement of net position and depreciation expense for these assets is included in the expenses for the function that uses the assets. Yes GASB 34 and Related Pronouncements