Ministry Database Adjustments for 31 School Districts
For 31 school districts, changes to the Ministry's database revised the July 1, 2004 change in accounting policy prior period adjustment, previously provided in the "GAAP Implementation Transition Information" binder (June 2004). The annual amortization expense and deemed disposal journal entries were also impacted.
The Ministry database was adjusted to eliminate negative net additions. This corrected the resulting understatement of asset cost and amortization.
The historical data, for additions to furniture & equipment, vehicle and computer asset classes, was developed from data reported on school district audited financial statements. This data included the net value of additions and disposals, as separate data for additions and disposals was not available, thus, for any year in which disposals exceeded additions a "negative" addition was recorded. These "negative" additions triggered negative amortization and deemed disposal entries and understated the asset cost and amortization.
For example, a school district purchased vehicles for $10,000 in 1989 then disposed of these assets in 1999. The historical data entered in the tool would include the $10,000 addition in 1989 and the $10,000 disposal in 1999 for a net cost of zero.
Based on an expected life of 10 years, the Tool would have calculated a deemed disposal prior period adjustment in 2004 to eliminate the 1989 purchase, which was pre-1995. In 2009, the negative $10,000 addition in 1999 will trigger a negative deemed disposal entry. The asset cost and amortization will be understated from 2004 to 2009.
To correct this situation, the Ministry database was adjusted for any school districts having "negative additions" from 1995 - 2003 for furniture & equipment and vehicle asset classes, and from 2000 - 2003 for the computer asset class. Disposals are now being recognized in the historical data by reducing the addition in the original year of purchase rather than the year of sale. It is assumed that any negative amount entered as additions for any given year equals disposals only. It is also assumed that disposals occur at the end of the asset's useful life (i.e.: 10 years). Using these assumptions and the example above, the $10,000 addition in 1989 would be reduced by $10,000 and the disposal in 1999 eliminated.
Details of adjustments to the ministry database for 31 school districts:
July 1, 2004 Prior Period Adjustments - 31 School Districts
School districts impacted by changes to the Ministry database will need to print the revised 2004 journal entries and supporting schedules for the change in accounting policy at July 1, 2004. To do this, enter 2003 as the data year and then print All Schedules and Journal Entries. Changes to the Ministry database will revise previous calculations for amortization expense and deemed disposals for the 2004/05 fiscal year and onward.