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Lesson 5: SPA Construction in Progress Transcript


Welcome to the Fiscal Management online training video for State Property Accounting Construction in Progress. State Property Accounting is also referred to as SPA.

After viewing this training, you should have an overview of:

  • The construction in progress category in SPA and
  • The procedures to follow when property is classified as construction in progress

Construction in Progress (CIP)

Construction in Progress (CIP) allows you to record the cost of construction work that is not yet completed. A CIP item is not depreciated until the asset is placed in service. Normally, upon completion, a CIP item is reclassified and the reclassified asset is capitalized and depreciated.

CIP can include:

  • Buildings and other structures
  • Infrastructure such as highways, energy distribution systems and pipelines
  • Internally generated intangible assets such as software projects
  • Additions
  • Alterations
  • Reconstruction
  • Installations
  • Fabricated personal property

When should CIP be used?

CIP should be used if:

  • The asset under construction is expected to meet the capitalization threshold for its asset category and
  • The project is one year or more in length and/or spans two fiscal years.

Tracking CIP Projects

Let’s go over the process of entering a CIP property in the SPA system.

When adding property under construction via the Add Property Screen in SPA, use Class Code 090 to designate the asset as a CIP project. CIP projects can be tracked in SPA using one or both of the methods documented below:

  • Use a single property number with multiple components (A maximum of 99 components can be tracked under one property number.) or
  • Assign a unique property number to each project.

For ease of disposal, it is recommended that you use components to track CIP. The SPA system is not able to handle partial disposals so it can be difficult to properly dispose of completed CIP if multiple projects or phases are lumped as one sum under a single property number.

The use of components allows for the completed individual projects or project phases to be disposed one at a time versus disposing of the entire asset. Careful consideration should be used in determining how to track CIP projects in the SPA system.

CIP property can be updated throughout the course of the construction project using the Update Fund Value screen in SPA.

Completing CIP Projects

A CIP project is considered complete when one of the following has occurred:

  • Execution of substantial completion contract documents
  • Occupancy
  • Internally developed software is substantially complete
  • The asset is placed into service

When the project is complete, CIP assets must be reclassified to their appropriate capital asset category under a new and permanent asset number.

Before the asset can be reclassified to its appropriate asset category, the original CIP property (or component) must be deleted. This is accomplished by disposing the CIP property with a disposal method 24. The disposal date used to dispose CIP must be after the date of the last transaction or expenditure added to the CIP property (or component) number.

If you discover your completed CIP project amount does not reach the capitalization threshold, simply dispose of the asset number with a disposal method 27 to remove it from the system.

Recording Completed Projects

Once property under construction has been completed and deleted from SPA, it must be added back into the SPA system using:

  • A new property number
  • The proper class code
  • An in-service date based on when the property was placed in service
  • Acquisition method 04 (for Constructed Property)

The new asset will begin depreciation on the in-service date.

If a building is to be componentized, the sum of all the new components should equal the value of the CIP property (component) deleted.

CIP Process

This slide presents a simplified summary of how to use the CIP process in SPA, from project initiation to completion.

First, use class code 090 when adding the asset to the system via the Add Property Screen in SPA. Assign the appropriate acquisition method of 01, 02 or 03.

Once the construction has been completed, use disposal method 24 to dispose the CIP asset from the SPA system. If you find that the project does not meet the threshold for the intended AFR category, use disposal method 27 to remove it from the system.

Finally, re-class the asset to its appropriate AFR category by entering a new asset number into the SPA system with the appropriate class code. Be sure to use acquisition method 04 to indicate constructed property.

Remember that the sum of the new additions must equal the value of the deleted CIP property.

CIP Example

Here, a visual example is provided to show how CIP will appear in certain fields on the CAAB101D when completing CIP that has multiple components. The section shown here would appear in the AFR category 6 Construction in Progress section of the CAAB101D.

CIP001 01 2005 CIP PROJECT A $500,000.00 ($500,000.00) $00.00
CIP001 02 2009 CIP PROJECT A $1,000,000.00 ($1,000,000.00) $00.00
CIP001 03 2010 CIP PROJECT A $3,000,000.00 ($3,000,000.00) $00.00
CIP001 04 2012 CIP PROJECT A $00.00 $00.00 $600,000.00
CIP002 01 2007 CIP PROJECT B $100,000.00 ($100,000.00) $00.00
CIP002 02 2010 CIP PROJECT B $4,000,000.00 ($4,000,000.00) $00.00
CIP002 03 2011 CIP PROJECT B $50,000,000.00 ($50,000,000.00) $00.00
CIP002 04 2012 CIP PROJECT B $00.00 ($10,000,000.00) $10,000,000.00
TOTAL       $58,600,000.00 ($69,200,000.00) $10,600,000.00

As you can see, there are two CIP projects in progress, each with four components. Note that the expenditures have been added over multiple fiscal years. In this example, the entire CIP projects were completed; therefore the total for the beginning balance and the current year additions added together is equal to the RECLASS CIP total.

This was accomplished by adding the expenditures to the SPA system using class code 090 at the time of the expenditure and then disposing the completed projects using disposal method 24 at the time of completion.

CIP Example

Continuing with the example on the previous slide:

Once the CIP asset has been disposed, it must be re-classed to the new, permanent asset number. This is accomplished by entering the assets into the SPA system using acquisition method 04.

A completed CIP can be assigned as many asset numbers as needed to properly track the assets, as long as the amount of RECLASS CIP in AFR category 6 (as shown on the previous slide) is equal to the amount of COMPLETED RECLASS CIP in AFR category 2 (as shown on the slide below). The total in the RECLASS CIP column for all AFR categories must always net to zero before you can be considered reconciled.

A00001 01 2012 MUSIC BLDG $00.00 $2,000,000.00 $2,000,000.00
A00002 01 2012 LIBRARY $00.00 $700,000.00 $700,000.00
A00003 01 2012 BIOLOGY BLDG $00.00 $1,300,000.00 $1,300,000.00
A00004 01 2012 CAFETERIA $00.00 $1,100,000.00 $1,100,000.00
B00001 01 2012 FIELDHOUSE $00.00 $25,500,000.00 $25,500,000.00
B00002 01 2012 STADIUM COMPLEX $00.00 $38,000,000.00 $38,000,000.00
B00003 01 2012 CONCESSIONS $00.00 $600,000.00 $600,000.00
TOTAL       $00.00 $69,200,000.00 $69,200,000.00

If the completed project is a building that must be componentized, you would simply add the necessary number of components to the property number assigned to the building. The sum of the new components should equal the total cost of the building, which should also equal the total cost of the completed CIP for that project.

Note that in this example, the two completed CIP projects became seven different assets in the SPA system, with the AFR category 4 RECLASS CIP total from the prior slide equal to the COMPLETED RECLASS CIP total in AFR category 6 shown here.

In conclusion, the Construction in Progress process provides an easy mechanism to track projects without physical substance until they are completed, placed in service and ready for depreciation.


Thank you for viewing this presentation. You should now have a basic understanding of Construction in Progress assets. This concludes the SPA Construction in Progress training.

For more SPA training and other Fiscal Management training opportunities, please log on to Training Center on FMX.

Glenn Hegar
Texas Comptroller of Public Accounts
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Comptroller.Texas.Gov | FMX
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