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Postsecondary Education

NCES 2006-160
May 2006

6.1 Infrastructure Reporting Under GASB 34/35

6.1.1 Background

The Governmental Accounting Standards Board (GASB), which is responsible for developing standards for state and local governmental accounting and reporting, including public postsecondary institutions, issued new guidelines in 2000 under GASB statements 34 and 35. These guidelines, designed to increase the publicís understanding of financial reports and thereby the usefulness of reports in policymaking, fundamentally altered traditional reporting practices for public postsecondary education institutions. Among the many changes introduced under the new guidelines is the requirement that state and local governments report all capital assets, including infrastructure, and depreciation expenses associated with those assets.

Under the new guidelines, capital assets are reported at historical costs. Capital assets include land, land improvements, buildings and improvements to buildings, vehicles, equipment, works of art and historical treasures, and infrastructure. infrastructure assets are those with a long useful life. They are normally stationary in nature and can be preserved for a significantly greater number of years than most capital assets. Examples of infrastructure assets include roads, bridges, tunnels, drainage systems, water and sewer systems, dams, and lighting systems.

infrastructure assets that are part of a network or are a subsystem of a network do not have to be depreciated as long as two requirements are met. First, public postsecondary institutions must manage assets by having an up-to-date inventory; performing regular condition assessments of the assets, which can measure, through an objective set of criteria, the outcome of that assessment; and estimating the annual amount needed to maintain and preserve the asset at the condition level that has been established and disclosed. Second, postsecondary institutions must document that the assets are being preserved at a level at or above the established condition level. Condition assessments must be performed in a consistent manner at least every 3 years and provide assurance that the second requirement is met.