Tangible Capital Asset Review Completed

Tangible Capital Asset Review Completed

first_imgA two-year review of how the provincial government values itscapital assets is resulting in amendments to the tangible capitalasset policy. In 2002, a tangible capital assets policy reviewcommittee began an in-depth review on the policy’s operationaleffectiveness and appropriateness. The report supports the existing policy, but recommends somerevisions to thresholds, classes and amortization rates. Thereport was reviewed by the auditor general’s office with furtherrecommendations, which the Department of Finance has accepted.The policy review was conducted by senior civil servants. “Our accounting policies are periodically reviewed to ensure theyreflect the current environment and best practice,” said FinanceMinister Peter Christie. In his management letter of Feb. 13, 2004, the auditor generalrecommended that the province review its threshold levels andencouraged the province to finalize its review. Amortization rates have been adjusted to be more in line with theuseful life of each asset, which will result in improved programcosting. Previously, assets were amortized over shorter timeframes, which proved more costly than necessary. There are three significant revisions to the policy: revisedthresholds for two asset classes; revised amortization rates forseveral asset classes; and two new classes added to tangiblecapital assets (buses and land improvements). The revisions donot constitute a change in accounting policy. The recommendationsrepresent a change in accounting estimates and are effective asof April 1, 2003. The revisions to the accounting thresholds and rates haveresulted in a $25 million reduction in operating expenses in2003-04. This is a combination of a $2-million reduction inoperational expenses that will now be reclassified as a result ofa reduction in the thresholds and $23 million resulting fromchanges to the amortization rates. There is no impact to the province’s debt reduction plan, or tothe debt. “Nova Scotia was one of the first provinces to adopt a tangiblecapital asset policy, in accordance with generally acceptedaccounting principles,” said Kevin Malloy, the province’scontroller. “We’re learning from experience and the review hashelped us bring our rates more in line with where they shouldbe.” “Nova Scotia is a leader in government financial accountability,so we are announcing these revisions in the interest of full andopen disclosure of the province’s policies,” said Mr. Christie.last_img

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