BOP Program Statement 2350.02 § 5

a. American Correctional Association 3rd Edition Standards for

Adult Correctional Institutions: 3-4025, 3-4029, and 3-4037

b. American Correctional Association 3rd Edition Standards for

Adult Local Detention Facilities: 3-ALDF-1B-01, 3-ALDF-1B-03,

and 3-ALDF-1B-10

P2350.02

6/22/2004

Page 4

c. American Correctional Association 2nd Edition Standards for

the Administration of Correctional Agencies: 2-CO-1B-01,

2-CO-1B-03, and 2-CO-1B-08

d. American Correctional Association Standards for Adult

Correctional Boot Camp Programs: 1-ABC-1B-01, 1-ABC-1B-03, and

1-ABC-1B-12

/s/

Harley G. Lappin

Director

P2350.02

6/22/2004

Table of Contents, Page i

TABLE OF CONTENTS

CHAPTER 1 DEFINITIONS/CRITERIA

DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . 1.1

CAPITALIZATION CRITERIA. . . . . . . . . . . . . . . . 1.2

CHAPTER 2 ASSET RECOGNITION

DONATED REAL PROPERTY. . . . . . . . . . . . . . . . . 2.1

ASSET RECOGNITION FORM. . . . . . . . . . . . . . . . . 2.2

BUILDINGS AND FACILITIES (B&F) AND ASSET FORFEITURE

FUND (AFF) APPROPRIATIONS. . . . . . . . . . . . . 2.3

RECOGNITION OF REAL PROPERTY AT THE INSTITUTION FOR B&F

PROJECTS FUNDED AT THE CENTRAL OFFICE. . . . . . . 2.4

RECOGNITION OF REAL PROPERTY AT THE INSTITUTION FOR B&F

PROJECTS FUNDED AT THE REGIONAL OFFICE. . . . . . 2.5

REQUIRED CENTRAL AND REGIONAL OFFICE RECONCILIATIONS. . 2.6

REAL PROPERTY RECORDS. . . . . . . . . . . . . . . . . 2.7

THE EFFECT OF PERSONAL PROPERTY. . . . . . . . . . . . 2.8

TRUST FUND REAL PROPERTY. . . . . . . . . . . . . . . . 2.9

CHAPTER 3 EXPENSE RECOGNITION

EXPENSE RECOGNITION IN THE GENERAL LEDGER. . . . . . . 3.1

FINANCIAL STATEMENTS ADJUSTMENTS. . . . . . . . . . . . 3.2

TRUST FUND NON-CAPITALIZED RENOVATIONS. . . . . . . . . 3.3

CHAPTER 4 CLOSING B&F PROJECTS

CLOSING A B&F PROJECT. . . . . . . . . . . . . . . . . 4.1

CLOSING B&F PROJECTS IN THE ACCOUNTING SYSTEM. . . . . 4.2

CLOSING B&F ACTIVATION PROJECTS. . . . . . . . . . . . 4.3

CLAIMS RESOLUTION PROJECTS. . . . . . . . . . . . . . . 4.4

PROJECTS, OTHER THAN Z-PROJECTS, ACCOUNTED FOR BY THE

CENTRAL OFFICE. . . . . . . . . . . . . . . . . . 4.5

CHAPTER 5 DEPRECIATION

DEPRECIATION. . . . . . . . . . . . . . . . . . . . . . 5.1

RECORDING DEPRECIATION IN THE GENERAL LEDGER. . . . . . 5.2

CHAPTER 6 ADJUSTMENTS AND DISPOSALS

ADJUSTMENTS TO REAL PROPERTY AND DEPRECIATION BALANCES. 6.1

ADJUSTMENTS TO EXPENSE PROJECTS. . . . . . . . . . . . 6.2

ASSET DISPOSAL. . . . . . . . . . . . . . . . . . . . . 6.3

P2350.02

6/22/2004

Table of Contents, Page ii

CHAPTER 7 ACCOUNT RECONCILIATION

ACCOUNT RECONCILIATION. . . . . . . . . . . . . . . . . 7.1

FILING OF B&F AND AFF PROJECT DOCUMENTS. . . . . . . . 7.2

ATTACHMENT A - ASSET RECOGNITION FORM

ATTACHMENT B - SEPTEMBER RECOGNITION OF B&F EXPENSES

ATTACHMENT C - SAMPLE REQUEST FOR FINANCIAL CLOSURE MEMO

ATTACHMENT D - REQUEST TO CLOSE A B&F PROJECT

P2350.02

6/22/2004

Chapter 1, Page 1

CHAPTER 1 - DEFINITIONS/CRITERIA

1.1 DEFINITIONS. The definitions of the Bureau’s real property

are consistent with the SFFAS No. 6. Refer to the Property

Management Manual for information on the control and use of real

property.

a. Land, Standard General Ledger (SGL) Account 1711.00. Land

is real estate held for productive use or investment. Bureau-owned land is recorded in SGL Account 1711.00.

b. Buildings, SGL Account 1730.10. A building is a roofed,

floored, and walled structure with electricity built for

permanent use. Buildings, including Trust Fund buildings, and

items of property permanently attached thereto, that meet this

Program Statement’s criteria are recorded in SGL Account 1730.10.

c. Capital Improvements, Buildings, SGL Account 1730.20. Any

improvement to an existing building that is a major renovation,

addition, or enlargement to an existing building, including a

Trust Fund building, and meets the criteria described in this

Program Statement is recorded in SGL Account 1730.20.

d. Other Structures and Facilities, SGL Account 1740.10. Any

structure or facility not classified as a building that meets the

criteria described in this Program Statement is recorded in SGL

Account 1740.10.

e. Capital Improvements, Other Structures and Facilities, SGL

Account 1740.20. Any improvement to an existing other structure

or facility that meets the criteria described in this Program

Statement is recorded in SGL Account 1740.20.

f. Leasehold Improvements, SGL Account 1820.00. Any

improvement, renovation, or other such change made to real

property the Bureau leases that meets the criteria described in

this Program Statement must be recorded in SGL Account 1820.00.

This includes any Trust Fund leasehold improvements.

g. Substantially complete/put-in-use. A building, other

structure, or improvement is considered substantially complete

when it is placed into use for its intended purpose (even if

additional finishing work is yet to be completed). The Facility

Manager must make this determination and it is not to be tied to

a project’s financial closure.

P2350.02

6/22/2004

Chapter 1, Page 2

Example: The Buildings and Facilities (B&F) project W3T was

established to install a sprinkler system in every

building in the institution and is considered a

phase project. The total project cost is

$200,000. At the initiation of the project, the

Facility Manager and Controller determined this to

be an improvement to buildings meeting the

capitalization criteria. The sprinkler system in

each building is considered substantially

complete/put-in-use as soon as it is operational.

Therefore, the project will be capitalized in

stages as each building is improved with its

sprinkler system. The Facility Manager must

advise the Controller in writing using the Asset

Recognition Form (see Chapter 2, section 2.2) as

each building’s sprinkler system is put-in-use.

h. SENTRY Real Property Management System (SRPMS). The

Property Officer at each Bureau location maintains the SRPMS.

When the Property Officer receives the written notification,

supplied to the Controller from the Facility Manager, stating

that real property has been put-in-use, he or she will make the

appropriate entry in SRPMS to record the asset.

The SRPMS will generate entries into the Financial Management

Information System (FMIS) automatically to capitalize the asset.

In addition, it will generate the monthly deprecation entries

automatically into FMIS for the items of real property in the

SRPMS database.

i. Recognition of capitalized assets. Assets must be

recognized in the SRPMS in the month of substantial completion;

therefore, they will also be reflected in the general ledger the

same month. The value on the current cost report (BOPRPT73), or

the Asset Recognition Form for phase projects, is to be used to

determine the amount to recognize initially in the SRPMS and the

general ledger.

Example: The B&F project X4J was established to construct a

warehouse and a housing unit. The total project

cost is $250,000. The Facility Manager considers

the warehouse substantially complete/put-in-use on

July 1, because it can be occupied by warehouse

staff and receive and deliver inventories (its

intended purpose). No later than July 29, the

warehouse must be entered in the SRPMS which will

generate the entry in the general ledger to

recognize the asset. (Entries into SRPMS may not

P2350.02

6/22/2004

Chapter 1, Page 3

be made during the last two working days of the

month.) Depreciation will commence automatically

in August.

j. Recognition of expenses. Accounts payable and expenditures

are recognized as expenses in the fiscal year in which they

occurred, regardless of the appropriation in which they are

incurred. Undelivered orders are never recognized as expenses.

Proper recognition of B&F and AFF costs which are determined to

be expenses must occur before the close of each fiscal year (see

Chapter 3).

k. Prior-period adjustments. A prior-period adjustment is

specifically identified to activities of a prior period (prior

fiscal year). A correction of an error made during a prior

fiscal year is considered a prior period adjustment.

Prior period adjustments require advance approval by the Chief,

Finance Branch, or designee before entry into the accounting

system. The local Office of Financial Management (OFM) must

request the adjustment. The location must prepare a journal

voucher with the accounting transactions and a clear and detailed

explanation of the correction and send it to the Comptroller

immediately for review. The Comptroller then forwards the

documentation, within five working days, to the Chief, Finance

Branch, for approval.

Finance Branch staff receive management reports from the SRPMS

system to indicate if a prior-period adjustment is required.

Finance Branch staff will compare the SRPMS management reports to

journal vouchers local OFMs submit. After approval by the Chief,

Finance Branch, or designee and entry into the accounting system,

a copy of these journal vouchers will be forwarded to the

Controller or Comptroller of the affected locations.

l. SGL Account 1720.10, Construction in Progress—Open. This

general ledger account has a normal debit balance. It reflects

the cumulative costs of projects which are in progress (open) and

financed under the B&F, 15X1003 (X3), or Asset Forfeiture Fund

(AFF), 15X5094 (X9), appropriation.

The costs remain in this account until the B&F or AFF project

is closed financially (closed in the accounting system). This

account also captures costs for Trust Fund, 15X8408 (X4),

Construction in Progress-Open.

P2350.02

6/22/2004

Chapter 1, Page 4

m. SGL Account 1720.20, Construction in Progress—Complete.

This general ledger account has a normal credit balance. It

reflects the cumulative costs of assets capitalized, or expenses

recognized, in the S&E appropriation that were financed under B&F

or AFF projects that have not reached financial closure. This

account also captures costs for Trust Fund Construction in

Progress-Complete.

n. SGL Account 5730.21, Financing Sources Transferred out

without Reimbursement-BF- Non-Capitalized. This account is used

in the B&F or AFF appropriation and reflects the amounts

transferred out to be recognized as expenses in S&E. The

Transaction Code (TC) 5020A is used which will debit the 5730.21

and credit the 1720.20 to transfer the cost of expenses from X3

or X9. The TC 5025A must be done at the same time to transfer

the expenses into the current year S&E appropriation.

o. SGL Account 5720.21, Financing Sources Transferred in

without Reimbursement-BF- Non-Capitalized. This account is used

in the S&E appropriation and reflects the amounts transferred in

from B&F or AFF to be recognized as expenses. The TC 5025A is

used in S&E to debit the 6790.20 expense account and credit the

5720.21 to transfer in the cost of expenses from X3 or X9.

p. SGL Account 5730.22, Financing Sources Transferred out

without Reimbursement-BF- Capitalized. This account is used in

the B&F or AFF appropriation and reflects the amounts transferred

out to be recognized as real property in S&E. The Transaction

Code (TC) 5020B is used which will debit the 5730.22 and credit

the 1720.20 to transfer the costs from X3 or X9. The TC 5025B

must be done at the same time to transfer the amount to be

recognized as real property into the current year S&E

appropriation. An automated entry will be generated from the

SRPMS to classify the asset in S&E properly.

q. SGL Account 5720.22, Financing Sources Transferred in

without Reimbursement-BF- Capitalized. This account is used in

the S&E appropriation and reflects the amounts transferred in

from B&F or AFF to be recognized as real property. The TC 5025B

is used in S&E to debit the 6790.20 expense account and credit

the 5720.22 to transfer the cost of assets from X3 or X9. An

automated entry will be generated from the SRPMS to properly

classify the real property in S&E.

r. SGL Account 7400.00, Prior Period Adjustments. The Finance

Branch uses this account when making certain prior-period

adjustments.

P2350.02

6/22/2004

Chapter 1, Page 5

1.2 CAPITALIZATION CRITERIA. The criteria set forth in SFFAS

No. 6 and in this Program Statement must be used to determine if

costs will be capitalized or expensed. The method of funding

(Salaries and Expenses, Buildings and Facilities, or Trust Fund)

must not be the factor used when determining whether a cost is

capitalized or expensed.

The Facility Manager and Controller must confer to determine, at

the initiation of a B&F or AFF funded project, if the project

will be capitalized or expensed. This determination is to be put

in writing and signed by the Facility Manager and Controller.

The following real property must be capitalized:

! land, regardless of the cost or donated value. Land is

recorded at the acquisition price or donated value plus

incidental costs (real estate commission, attorney’s fees,

escrow fees, title and recording fees, etc.). Upon the

initial acquisition of land, all costs associated with

preparing land for use are capitalized in the land account,

including the cost of demolishing an old building to clear

the land to construct a new building.

! buildings with a useful life of 30 years and a cost of

$250,000 or more.

! other structures and facilities with a useful life of 20

years and a cost of $250,000 or more.

! improvements, alterations, remodeling, and equipping of

existing facilities which extend the useful life, enlarge,

or improve its capacity/usefulness and cost $250,000 or

more.

! improvements, renovations or other such changes to real

property leased by the Bureau with a cost of $250,000 or

more.

The total project cost must be considered, rather than individual

items, in determining if the $250,000 threshold has been met.

If the following projects meet the criteria listed above, they

must be capitalized and depreciated. These examples are not

intended to be an all inclusive list of possible real property,

but are intended to serve as a guide for determining

capitalization criteria.

P2350.02

6/22/2004

Chapter 1, Page 6

PROJECT CLASSIFICATION

Install natural gas lines Other Structures or Facilities -

1740.10

Replace roofs Capital Improvement, Bldg. -

1730.20

Replace doors Capital Improvement, Bldg. -

1730.20

Supplemental exterior Other Structures or Facilities -

lights 1740.10

Install security wire Capital Improvement, Other

(existing fence) Structures and Facil - 1740.20

Helicopter deterrent Other Structure or Facilities -

1740.10

Re-pave roads Capital Improvement, Other

Structures and Facil - 1740.20

Construct new road Other Structure or Facilities -

1740.10

Construct new housing unit Building - 1730.10

High mast lighting Other Structure or Facilities -

1740.10

Upgrade perimeter security Other Structure or Facilities -

(new) 1740.10

Upgrade perimeter security Capital Improvement, Other

(existing) Structures or Facil - 1740.20

Modify door control Capital Improvement, Bldg. -

1730.20

Install security bars Capital Improvement, Bldg. -

1730.20

Life-safety projects (those Capital Improvement, Bldg. -

to bring the institution 1730.20

into compliance with local

fire codes)

Asbestos abatement Capital Improvement, Bldg. -

1730.20

Construct New Commissary Building, Trust Fund Facility -

1730.10

Renovate Commissary Capital Improvement, Bldg. -

1730.20

P2350.02

6/22/2004

Chapter 1, Page 7

The standards set forth is SFFAS No. 6 must be applied

consistently throughout the Bureau. Recognizing the above list

is not all inclusive of improvements, alterations, or equipping

existing facilities, questions arising over whether to capitalize

or expense a project must be directed to the Central Office,

Finance Branch, through the appropriate Regional Office.

P2350.02

6/22/2004

Chapter 2, Page 1

CHAPTER 2 - ASSET RECOGNITION

2.1 DONATED REAL PROPERTY. Real property donated by other than

a federal agency must be capitalized in an amount equal to the

estimated fair value when the Bureau acquired it. Real property

donated by a federal agency is to be capitalized in an amount

equal to the asset’s book value.

The donated value is to be recorded in the SRPMS in the current

year S&E appropriation. The SRPMS will automatically generate

the entry to record the real property in the SGL.

If the Bureau obtains an asset by donation and improves,

renovates, or alters it, the value recognized for the asset must

be the donated value. The costs of any improvements,

renovations, and alterations will be recognized as improvements

to the asset.

2.2 ASSET RECOGNITION FORM. The Facility Manager is to report

to the Controller all real property substantially complete/put-in-use by using the Asset Recognition form (Attachment A) or a

similar form which supplies the equivalent information. The real

property is to be recorded in the general ledger at cost. Staff

at each OFM must complete the procedures necessary to capitalize

properly all real property the Facility Manager identifies as

substantially complete/put-in-use.

2.3 BUILDINGS AND FACILITIES (B&F) AND ASSET FORFEITURE FUND

(AFF) APPROPRIATIONS. Real Property costs funded by the B&F or

AFF appropriation must be recognized in the general ledger when

the asset is put-in-use, prior to the project’s financial

closure.

The Property Officer must enter the real property in SRPMS as

assets are put-in-use and upon receiving an Asset Recognition

form from the Facility Manager. The Property Officer must

maintain the Asset Recognition forms chronologically by project.

The Property Officer is to run an adding machine tape of all

Asset Recognition forms for open B&F and AFF projects at the end

of each month and give the tape to the Accounting Supervisor for

proof-check reconciliation purposes.

Once a B&F project is closed in the accounting system, all

original Asset Recognition forms for the closed B&F project are

to be forwarded to the Accounting Supervisor and maintained in

the project file.

P2350.02

6/22/2004

Chapter 2, Page 2

Asset Recognition accounting entries are entered before the B&F

or AFF Project’s Financial Closure. The real property must be

entered into SRPMS and accounting entries to recognize the real

property must be generated (via SRPMS) the month the asset is

substantially complete/put-in-use. The total project cost from

the BOPRPT73 report for the month the asset is put-in-use, or the

amount from the Asset Recognition form for phase projects, is to

be used in the transactions below.

The Accounting Supervisor is to transfer out of X3 or X9 the

costs of the real property put-in-use using the 5020B Transaction

Code (TC). In addition, a TC 5025B must be entered in the

current year S&E appropriation to transfer in the costs of the

real property to be recognized.

A sset

T C SX FI FO FY Fund A ctC lass PGM Proj R C N SOC Schedu le A mt D esc

502 0 B

502 5 B

_ _ X 3 FP0 X X X X X PX *** NA N A JV _ _ _ _ $XX X RecogAsset *** JV ___

or X9 or PZ

_ _ 02 FP0 X X X X X P1 NA NA N A JV _ _ _ _ $XX X RecogAsset *** JV ___

(*** represents the project code)

Note for Central Office only: The ActClass to be used in S&E

transactions referenced in this PS which are transferring in B&F or

AFF charges to be recognized on the Central Office general ledger is

FP07003208.

Both manual TC entries must be recorded on a Journal Voucher (JV)

and approved by the Controller. A copy of the SRPMS real

property record must be attached to the JV.

When the Property Officer makes the SRPMS entry, it will generate

the TC automatically to classify the asset in the general ledger

properly. The automatic TC will debit the asset account and

credit the appropriate expense account.

Monthly depreciation entries will be generated automatically from

the SRPMS and will be reflected on the general ledger for each

item of real property.

2.4 RECOGNITION OF REAL PROPERTY AT THE INSTITUTION FOR B&F

PROJECTS FUNDED AT THE CENTRAL OFFICE. When real property, as

identified by the Chief, Facilities Management Branch, or the

Chief, Design and Construction Branch, is substantially

complete/put-in-use, he or she must ensure the asset(s) is

capitalized.

P2350.02

6/22/2004

Chapter 2, Page 3

a. The Chief, Facilities Management Branch, or the Chief,

Design and Construction Branch, as appropriate, must submit an

Asset Recognition or a like form, to the Controller, Central

Office Business Office (COBO), for each asset that is

substantially complete/put-in-use.

b. The Controller, COBO, is to complete the necessary

accounting entries on the Asset Recognition Form for submission

to and approval by the Chief, Finance Branch.

c. The Chief, Finance Branch, must review the Asset

Recognition form within 10 working days after receipt. After

approval, the Chief, Finance Branch, is to send copies of the

approved Asset Recognition form to the Controller, COBO, the

Institution Controller, and the appropriate Regional Comptroller.

When the approved Asset Recognition Form is received:

! the Controller, COBO, will ensure the TC 5020B is

entered, to transfer out the costs from X3 or X9,

within two working days after receiving the form. The

Controller, COBO, will notify the institution of the

accounting month the transaction was entered. This

transaction must be documented on a JV; and

! the Institution Controller will ensure the TC 5025B is

entered in the current year S&E appropriation to

transfer in the costs of the real property to be

recognized. The local Property Officer must make the

SRPMS entry and it will generate the TC automatically

to classify the asset properly in the general ledger.

These entries must be performed in the same accounting

month as COBO enters the 5020B TC. This transaction

will be documented on a JV.

2.5 RECOGNITION OF REAL PROPERTY AT THE INSTITUTION FOR B&F

PROJECTS FUNDED AT THE REGIONAL OFFICE. The Regional Comptroller

and Regional Facilities Administrator must review all institution

B&F projects established at the Regional Office to determine

which meet the capitalization criteria in this Program Statement

and ensure they are processed properly. This determination must

be in writing and signed by the Facilities Administrator and the

Comptroller. A copy of the determination will be forwarded to

the appropriate institution Controller.

Construction work performed at institutions sometimes require B&F

projects established at the Regional Office as well as the

institution. A common example occurs when architectural and

engineering (A&E) services are funded from a B&F project at the

P2350.02

6/22/2004

Chapter 2, Page 4

Regional Office, while construction work and costs corresponding

with the A&E service are funded from a B&F project established at

the institution. Costs of these B&F projects in the Regional

Offices must not be expensed when the B&F project at the

institution has been capitalized.

The combined project costs from multiple locations must be

considered when deciding whether to expense or capitalize a

project. If the combined costs of the project in the Region plus

the project in the institution are $250,000 or more, then the

dollar threshold for capitalization has been met. These Regional

projects must be reviewed to ensure they are capitalized at the

institution consistent with the projects funded in the

institution. A copy of the written determination to capitalize

or expense the regionally funded project will be forwarded to the

appropriate institution Controller.

The Comptroller will coordinate with institution Controllers to

ensure that institutions include the costs of Regional projects

when recognizing assets on the general ledger and in the SRPMS.

If the project funded at the region is complete, but must be

included in the asset value at the institution, the regional OFM

will not complete the transfer out TC, in X3 or X9, until the

asset has been put-in-use at the institution.

2.6 REQUIRED CENTRAL AND REGIONAL OFFICE RECONCILIATIONS. The

Central and Regional Offices are required to perform the

following steps for institution projects that are funded at the

Central/Regional Offices and were open during the current fiscal

year:

! verify which project costs should be transferred out of B&F

or AFF and whether the necessary entries have been made at

the Central/Regional Office,

! identify which institution is required to make the entry to

transfer project costs into the current year S&E

appropriation,

! verify that the amount the institution transferred into S&E

is the same amount as the Central/Regional Office

transferred out of B&F or AFF,

! verify that the institution transferred the costs into S&E

the same way (capitalized or non-capitalized) as they were

transferred out of B&F or AFF by the Central/Regional

Office,

P2350.02

6/22/2004

Chapter 2, Page 5

! verify that the institution transferred the costs into S&E

during the same fiscal year as the Central/Regional Office

transferred out the costs in B&F or AFF,

! maintain a reconciliation indicating:

• the project code,

• amount,

• month transferred out of B&F or AFF by the

Central/Regional Office,

• month transferred into S&E by the institution,

• the institution involved, and

• the FMIS document numbers used by the Central/Regional

Office and the institution, and

! notify each location of any correcting entries that are

required and ensure that all entries are accomplished by the

close of the following month.

Comptrollers and the Controller, COBO, will submit copies of

their reconciliations for the current fiscal year to the Chief,

Finance Branch, by the fifth working day each month.

2.7 REAL PROPERTY RECORDS. The Property Officer must maintain,

using the SRPMS, subsidiary records to support the SGL accounts

1711.00, 1730.10, 1730.20, 1740.10, 1740.20, and 1820.00. Real

property information must be maintained in accordance with the

Property Management Manual.

2.8 EFFECT OF PERSONAL PROPERTY. If capitalized personal

property is purchased from the B&F or AFF project, it must be

transferred out of the X3 or X9 appropriation when received, by

entering the TC 5020B. In addition, a TC 5025B must be entered

to transfer the cost into current year S&E.

The Property Officer must make an entry into the SPMS in the

current year S&E appropriation, using the appropriate transaction

for capitalized equipment transferred in from B&F. This will

generate the automated TC to classify the capitalized personal

property in the general ledger properly. The amount of the TC

5020B, the TC 5025B, and the SPMS entry must be the same.

If non-capitalized personal property is purchased from project

funds, the costs of the non-capitalized personal property will

remain in the project and be either capitalized as real property,

if the project meets the capitalization criteria, or expensed

with the rest of the project as explained in Chapter 3.

P2350.02

6/22/2004

Chapter 2, Page 6

2.9 TRUST FUND REAL PROPERTY. Trust Fund (X4) resources may be

allocated for constructing or renovating Commissary facilities.

Approval must be received from the Chief, Trust Fund Branch,

Central Office, before any construction or renovation begins.

The capitalization criteria for Trust Fund real property is the

same as described in Section 1.2 of this PS.

For Trust Fund capitalized construction and renovations all costs

must be charged to ActClass FPXXXXXXV8. All costs charged to the

V8 ActClass are captured in SGL account 1720.10, Construction in

Progress—Open, on the X4 general ledger.

The Property Officer must enter the real property into SRPMS,

using the appropriate codes for Trust Fund funded real property,

as assets are put-in-use and upon receiving an Asset Recognition

form from the Facility Manager. A copy of the Asset Recognition

form will be forwarded to the Accounting Supervisor.

The Accounting Supervisor is to enter, in X4, the costs of the

real property put-in-use using the TC 5026 the same month the

SRPMS entry was completed. The manual TC entry must be recorded

on a JV and approved by the Controller. A copy of the SRPMS real

property record must be attached to the JV.

A sset

T C SX FI FO FY Fund A ctC lass PGM Proj R C N SOC Schedule A mt D esc

5026 _ _ X 4 FP0X X X X X V 8 CM S NA N A JV _ _ _ _ $XX X RecogAsset *** JV ___

The TC 5026 records the costs in the SGL account 1720.20,

Construction in Progress—Complete, and the automated entry in

SRPMS properly reclassifies the cost of the asset in the real

property asset account. The SRPMS entry for the X4 acquisition

and the TC 5026 must be accomplished for the same amount.

P2350.02

6/22/2004

Chapter 3, Page 1

CHAPTER 3 - EXPENSE RECOGNITION

3.1 EXPENSE RECOGNITION IN THE GENERAL LEDGER. Periodically,

B&F funding is provided for institution maintenance costs (i.e.,

utilities, training, travel), non-capitalized construction costs,

and Regional and/or Central Office salaries that are not

associated with the construction or renovation of a particular

Bureau facility.

Non-capitalized costs must be captured, as explained below, each

year in the current year S&E appropriation. Regional Facilities

Administrators are responsible for monitoring obligations against

these projects for their respective regions. The Chief,

Facilities Resource Management, Central Office, is responsible

for monitoring these obligations for Central Office B&F projects.

For B&F and AFF projects that have been determined to be non-capitalized/expensed, as determined jointly by the Facility

Manager and Controller, all expenses incurred during a fiscal

year must be recognized before the close of that fiscal year in

the current year S&E appropriation.

On September 20 of each year (or the first working day

thereafter), all OFMs must run the BOPRPT73 cost report and

determine the unrecognized expense amounts for open projects

attributable to the current fiscal year. Within two working

days, the information from the September 20 BOPRPT73 must be used

to complete the September Recognition of B&F Expenses (Attachment

B) and to make the following entries into the accounting system.

Note: It is critical that each location run the BOPRPT73 on

the same day, September 20, to ensure accurate

financial statement adjustments as described in Section

3.2.

Enter a TC 5020A for each project to transfer the costs out of

the X3 or X9 appropriation. In addition, a TC 5025A must be

entered in the current year S&E appropriation to transfer in the

expenses.

E xp ense

T C SX FI FO FY Fund A ctC lass PGM Proj R C N SOC Schedu le A mt D esc

502 0 A

502 5 A

_ _ X 3 FP0 X X X X X PX *** NA N A JV _ _ _ _ $XX X RecogExp *** JV ___

or X9 or PZ

_ _ 02 FP0 X X X X X P1 NA NA N A JV _ _ _ _ $XX X RecogExp *** JV ___

(*** represents the project code)

P2350.02

6/22/2004

Chapter 3, Page 2

Each Regional OFM must review its September 20 BOPRPT73 for open

projects that must be expensed at respective institution OFMs.

The Comptroller is to ensure the proper documentation (Regional

BOPRPT73 from September 20 and completed Attachment B) for these

projects is submitted to the appropriate institution OFM for

entry into the accounting system. The Regional OFM will enter

the TC 5020A and the institution OFM will enter the TC 5025A.

Before September 30, each Controller must e-mail or fax his or

her completed Attachment B to the respective Regional Office.

Regional Comptrollers will ensure each location has completed

Attachment B properly and made the appropriate accounting

entries. If corrections are necessary and the accounting system

has not been closed for the fiscal year, the regional OFM staff

will notify the Controller to make immediate correcting entries.

If the accounting system has been closed for the fiscal year,

regional OFM staff will explain the error and attach the

explanation to that location's Attachment B. Regional

Comptrollers will then forward the Attachment B, and any

explanation of errors, from all locations in the region to the

Chief, Finance Branch, by October 20 (or the first working day

thereafter).

If a project accounted for by the Central Office is to be

expensed, the Finance Branch, Central Office makes all necessary

entries in the B&F or AFF and the S&E appropriations. The

Finance Branch staff will make the entry in S&E, transferring in

the expense, on the institution's general ledger. A copy of the

JV COBO prepared for the expense recognition will be sent to the

respective location’s Controller or Comptroller.

3.2 FINANCIAL STATEMENTS ADJUSTMENTS. The Finance Branch will

determine the amount of any additional costs for expense projects

for the period September 21-30. The Financial Statements

Section, Finance Branch will compute and enter directly into the

audited financial statements any adjustment amounts necessary.

(Local OFMs will not make accounting entries for this

adjustment.)

3.3 TRUST FUND NON-CAPITALIZED RENOVATIONS. Trust Fund (X4)

resources may be allocated for non-capitalized construction or

renovation of Commissary facilities. Approval must be received

from the Chief, Trust Fund Branch, Central Office, before any

construction or renovation begins.

P2350.02

6/22/2004

Chapter 3, Page 3

For Trust Fund non-capitalized construction and renovations all

costs must be charged to ActClass FPXXXXXXC7. All costs charged

to the C7 ActClass are accounted for as expenses automatically.

Therefore, no year-end procedures or manual Transaction Codes are

required.

P2350.02

6/22/2004

Chapter 4, Page 1

CHAPTER 4 - CLOSING B&F PROJECTS

4.1 CLOSING A B&F PROJECT. A B&F project is ready to be closed

when it is 100 percent complete; that is, all construction,

deliveries and/or cancellations have been completed and no

additional obligations, including salaries, will be incurred

against the project. The Facility Manager, who is responsible

for monitoring the open obligations for B&F projects, must submit

a Request for Financial Closure memorandum (Attachment C) to the

Controller.

The OFM staff must then conduct a review of all open obligation

documents and take the appropriate steps to ensure payments are

processed and accounts payable amounts are liquidated. All open

obligations for the project must be cleared within 60 calendar days

of receiving the “Request for Financial Closure” memorandum. If

obligations cannot be cleared within 60 calendar days, the

Controller is to submit a memorandum to the Regional Comptroller

detailing the status of all remaining obligations and the actions

being taken to clear them (refer to the procedures in Section 4.4).

Within five working days after all obligations are cleared, the

Controller must submit to the Comptroller the “Request to Close a

B&F Project” (Attachment D), detailing the financial status of

the project and attaching:

! all previously completed JVs;

! a current BOPRPT73, Cost by Project;

! copies of SRPMS real property records, if any; and

! the Request for Financial Closure memo.

The Comptroller must review the financial records to verify that

all obligations have been liquidated and obtain an “Allotment/

Plan Revision Request” from the Regional Facilities

Administrator, indicating the disposition of any unobligated

funds to be contra-allotted during the next allotment cycle.

If there are no funds to be contra-allotted and no further action

is necessary, the Comptroller is to approve the “Request to Close

a B&F Project,” and return it to the Controller within two weeks

of receiving the Controller’s request. However, if there are

unobligated funds remaining to be contra-allotted, the

Comptroller must approve the “Request to Close a B&F Project”

within five working days of receiving the contra-allotment.

Upon receiving an approved “Request to Close a B&F Project,” the

Controller is to forward a copy to the Facility Manager and

ensure the appropriate accounting entries described below are

recorded in the accounting system within five working days after

P2350.02

6/22/2004

Chapter 4, Page 2

the approved request is received. The allotment transaction must

be processed in the same month the Regional Office contra-allots

the unobligated balances. The following entries must be made to

close B&F projects:

a. Project closure accounting entries for assets recognized

prior to a project’s financial closure.

(1) Enter a TC 5022, in X3 or X9, to close the Construction

in Progress-Open General Ledger Account, 1720.10, and the

Construction in Progress-Complete General Ledger Account,

1720.20. This is the total amount of the project from the

BOPRPT73, Cost by Project (Fund Totals Cumulative line), and

should equal the amount of the Asset Recognition Forms, and

capitalized personal property, if any, and is the total

accumulated cost for the project.

T otal Proj

T C SX FI FO FY Fund A ctC lass PGM Proj R C N SOC Schedule A mt D esc

5022 _ _ X 3 FP0X X X X X PX *** NA N A JV _ _ _ _ $X X X Close ***JV _ _ _ _

or X9 or PZ

(*** represents the project code)

This entry nets the B&F project’s General Ledger Account

1720.10 debit balance with the General Ledger Account 1720.20

credit balance and equals the total project cost. Once

completed, all Construction-in-Progress in the two general ledger

accounts for the project being closed will be zero.

(2) Enter a TC 0211 after the contra-allotment is received

to remove the unobligated balance.

U nO bl

T C SX FI FO FY Fund A ctC lass P G M Proj R C N SOC Schedule A mt D esc

0211 _ _ X 3 FP 0X X X X X P X *** N A 1100 allot# ( $X XX ) C ontra-allot ***

or X 9 or PZ or 2600

(*** represents the project code)

b. Project closure accounting entries, if costs are expensed.

Expenses accrued through each September 20 are recognized in the

general ledger each September. When an expense project is ready

to be closed, the unrecognized amount of that project from the

BOPRPT73 for the month of closure will be used in the TC 5020A

and TC 5025A below to recognize any previously unrecognized

expense.

P2350.02

6/22/2004

Chapter 4, Page 3

(1) The following TC 5020A transfers out the remaining

unrecognized amount in X3 or X9 and the TC 5025A transfers in the

remaining expense in S&E:

E xp ense

T C SX FI FO FY Fund A ctC lass PGM Proj R C N SOC Schedu le A mt D esc

502 0 A

502 5 A

_ _ X 3 FP0 X X X X X PX *** NA N A JV _ _ _ _ $XX X RecogExp *** JV ___

or X9 or PZ

_ _ 02 FP0 X X X X X P1 NA NA N A JV _ _ _ _ $XX X RecogExp *** JV ___

(*** represents the project code)

These transactions must be documented on a JV and approved

by the Controller. This JV plus all other required documentation

will then be forwarded to the Comptroller with the "Request to

Close a B&F Project." All the expenses have now been fully

recognized for this project and the following accounting entries

to close the project must be entered.

(2) When approval for closure is received from the

Comptroller, enter a TC 5022, in X3 or X9, to close the

Construction in Progress-Open General Ledger Account, 1720.10,

and the Construction in Progress-Complete General Ledger Account,

1720.20. This is the total amount of the project, from the

BOPRPT73, Cost by Project (Fund Totals Cumulative line), and

should equal the amount of the expense recognition JVs and

capitalized personal property, if any, and is the total

accumulated cost for the project.

T otal Proj

T C SX FI FO FY Fund A ctC lass PGM Proj R C N SOC Schedu le A mt D esc

5022 _ _ X 3 FP0 X X X X X PX *** NA N A JV _ _ _ _ $X X X Close ***JV _ _ _ _

or X9 or PZ

(*** represents the project code)

(3) Enter a TC 0211 after the contra-allotment is received

to remove the unobligated balance.

U nO bl

T C SX FI FO FY Fund A ctC lass P G M Proj R C N SOC Schedu le A mt D esc

021 1 _ _ X 3 FP 0X X X X X P X *** N A 1100 allot# ( $ X X X ) C ontra-allot ***

or X 9 or PZ or 2600

(*** represents the project code)

c. Project closure accounting entries for capitalized Trust

Fund (X4) construction and renovations.

P2350.02

6/22/2004

Chapter 4, Page 4

(1) Enter a TC 5022 in X4 to close the Construction in

Progress-Open General Ledger Account, 1720.10, and the

Construction in Progress-Complete General Ledger Account,

1720.20. This is the total amount of the construction and should

equal the amount of the Asset Recognition forms, and capitalized

personal property, if any, and is the total accumulated cost for

the construction.

T otal Proj

T C SX FI FO FY Fund A ctC lass PGM Proj R C N SOC Schedule A mt D esc

5022 _ _ X 4 FP0X X X X X V 8 CM S N A NA JV _ _ _ _ $X X X Close ___JV _ _ _ _

This entry nets the X4 General Ledger Account 1720.10 debit

balance with the General Ledger Account 1720.20 credit balance.

Once completed, all Construction-in-Progress in the two general

ledger accounts for the completed construction will be zero.

(2) Enter a TC 0211 after the contra-allotment is received

to remove the unobligated balance.

U nO bl

T C SX FI FO FY Fund A ctC lass P G M Proj R C N SOC Schedule A mt D esc

0211 _ _ X 4 FP0X X X X X V 8 CM S NA X X X X allot# ( $X X X ) Contra-allot ___

4.2 CLOSING B&F PROJECTS IN THE ACCOUNTING SYSTEM. The

Comptroller, within 10 working days after approving the “Request

to Close a B&F Project,” must prepare and forward a memorandum to

the Chief, Finance Branch requesting the project’s closure in the

accounting system. This request may be submitted via e-mail. He

or she will ensure all accounting entries are completed before

requesting closure.

Within five working days of receiving the memo requesting closure

of the project, the Financial Systems Section, Finance Branch, is

to perform the necessary functions to close the project in the

accounting system.

4.3 CLOSING B&F ACTIVATION PROJECTS. The Central Office

controls B&F projects for construction of new institutions

(Z-Projects). The Design and Construction Project Manager is

responsible for monitoring the open obligations for Z-Projects.

The Chief, Design and Construction Branch, must submit a

memorandum to the Controller, COBO, stating the project has

reached final completion and the Bureau has taken possession of

the facility. Within 30 calendar days of receiving the

memorandum, the Controller, COBO, must submit a memorandum to the

Chief, Finance Branch, requesting approval to capitalize current

costs against the project. Then, Finance Branch staff must

P2350.02

6/22/2004

Chapter 4, Page 5

review the project’s financial records. If no further action is

necessary, the request is to be approved and returned to the

Controller, COBO, who must ensure the appropriate accounting

entry is recorded in the accounting system to transfer the costs

out of the X3 or X9 appropriation.

The Chief, Finance Branch, is to inform the appropriate

accounting station of the approval to capitalize project costs

and provide the accounting entries necessary to record the real

property values in the current year S&E appropriation. The

Institution Controller will ensure the appropriate accounting

entry is made and the local Property Officer makes the SRPMS

entries.

Once the project is reported as 100 percent complete, the Chief,

Design and Construction Branch, submits a "Request for Financial

Closure" to the Controller, COBO. Upon receipt, COBO staff are

to review all open obligation documents and take the appropriate

steps to ensure payments are processed and accounts payable

amounts are liquidated within 60 calendar days.

After all open obligations have been liquidated, the Controller,

COBO, submits a "Request to Close a Z-Project" for concurrence

and approval through the Chief, Construction Contracting, and the

Chief, Facility Resource Management.

The Chief, Finance Branch, is responsible for approving all

"Requests to Close Z-Projects." Upon receiving a "Request to

Close a Z-Project," containing the necessary concurrences for

closure, the Financial Systems Section, Finance Branch, is to

review the financial records to verify that all obligations have

been liquidated. If no further action is necessary, the request

must be approved and returned to the Controller, COBO.

Upon receiving the approved "Request to Close a Z-Project," the

Controller is to forward a copy to the Chief, Design and

Construction Branch, and ensure the appropriate accounting

entries to close the project are recorded in the accounting

system in the same month the approved request is received.

The Chief, Finance Branch, must inform the appropriate accounting

station of the project closure and provide the entries necessary

to record the additional asset value in the accounting system and

the SRPMS. Once all closing entries have been recorded in the

accounting system, the Controller, COBO, is to prepare a

memorandum to the Chief, Finance Branch, requesting the project’s

closure in the accounting system.

P2350.02

6/22/2004

Chapter 4, Page 6

4.4 CLAIMS RESOLUTION PROJECTS. This section does not apply to

Z-projects. (Refer to Section 4.3 of this Program Statement for

procedures regarding Z-projects.)

If open obligations cannot be cleared within 60 calendar days of

receiving the “Request for Financial Closure,” the Controller is

to submit a memorandum to the Comptroller detailing the status of

all remaining obligations and the actions being taken to clear

them. The Comptroller must determine whether to allow additional

time to clear the open obligations or request the establishment

of a “Claims Resolution Project” for the remaining obligations.

Obligations are to be transferred to a “Claims Resolution

Project” only when there is a pending claim against a project and

it is determined that an extended period of time will be required

to resolve the claim.

When additional time is granted, the Regional Comptroller must

notify the Regional Facilities Administrator. The institution

Controller is to update the Comptroller every 30 calendar days on

the status of open obligations until they are cleared.

When establishment of a “Claims Resolution Project” is requested,

the Comptroller and Facilities Administrator are to submit to the

Chief, Facilities Management Branch, a joint memorandum detailing

the circumstances surrounding the outstanding obligations,

including the nature of any claims. Facilities Management staff

must review the documentation, determine if the outstanding

obligations fit the criteria, and establish a “Claims Resolution

Project.” A separate “Claims Resolution Project” number will be

established for each approved request.

Once a "Claims Resolution Project" is established, the Region

must transfer funds from the original project to the "Claims

Resolution Project." The Controller is to ensure that

obligations associated with the claim are transferred to the

"Claims Resolution Project." Within five working days after the

outstanding obligations have been transferred to the "Claims

Resolution Project," the Controller is to submit to the

Comptroller, a "Request to Close a B&F Project" memorandum for

the original project.

Within five working days after the claims are resolved, all

outstanding obligations have been cleared, and all necessary

documents and reports are received (BOPRPT73, Cost by Project;

and all other documents closing out the claims), the Controller

must submit to the Comptroller a "Request to Close a B&F Project"

memorandum for the "Claims Resolution Project."

P2350.02

6/22/2004

Chapter 4, Page 7

Within two weeks, the Regional Comptroller is to approve or deny

the “Request to Close a B&F Project,” and forward it to the

Controller if there are no unobligated funds to contra-allot;

otherwise, the Regional Comptroller must approve or deny the

request within five working days of receiving the contra-allotment.

Within five working days after receiving the approved request,

the Controller must ensure the appropriate accounting entries

required to close the project, and to record or adjust the asset

value or expense, are entered in the accounting system. See

Section 6.1 for adjustments to previously recognized assets and

expenses.

The Regional Comptroller is responsible for ensuring institutions

are closing projects promptly and accurately. The Comptroller or

designee must contact institutions that have not made the

required accounting entries to close projects within the

specified time frame, to ensure the institution has received the

approval for closure, and to provide assistance in recording the

accounting entries, if necessary.

4.5 PROJECTS, OTHER THAN Z-PROJECTS, ACCOUNTED FOR BY THE

CENTRAL OFFICE. The COBO maintains the financial records for

several B&F projects that involve construction/improvements at

field locations. If capitalized, the procedures outlined in

Section 4.3, Closing B&F Activation Projects, will be followed.

The Chief, Facilities Management Branch, would be responsible for

monitoring these obligations.

P2350.02

6/22/2004

Chapter 5, Page 1

CHAPTER 5 - DEPRECIATION

5.1 DEPRECIATION. With the exception of land, each item of real

property is properly chargeable as a cost in the accounting

periods in which the asset is used. The accounting process for

this gradual conversion of real property fixed assets into

expense or cost is called depreciation.

a. Depreciation Method. The straight-line method of

depreciation is to be used to compute the amount of depreciation

for each real property fixed asset. Using this method, the real

property’s capitalized value is distributed as expense in equal

amounts to each accounting period in the asset’s estimated useful

life.

b. Depreciation Period

(1) Buildings. Buildings are to be depreciated by the

straight-line method over a 30 year period.

(2) Other Structures and Facilities. Other structures and

facilities must be depreciated by the straight-line method over a

20 year period.

(3) Capitalized Improvements. Capitalized improvements of

buildings, other structures, and facilities must be depreciated

by the straight-line method, generally over the period of either:

# the original structure’s remaining useful life or

# the estimated useful life of the particular

improvement to the original structure.

The Facility Manager must estimate the useful life of

capitalized improvements and whether capitalized improvements

extend the useful life of existing original buildings or other

structures and facilities in writing. The Controller is to

ensure the determinations are maintained on file to substantiate

the depreciation periods.

The following examples demonstrate how the estimated useful

life of capitalized improvements is to be determined.

(a) The useful life of the original structure is greater

than that of the improvement: If an original structure has a

remaining useful life of 20 years and the improvement has an

estimated useful life of 15 years, the improvement must be

depreciated over 15 years.

P2350.02

6/22/2004

Chapter 5, Page 2

(b) The useful life of the improvement is longer than

that of the original structure but does not extend the useful

life of the original structure that has substantial remaining

life: If an improvement has a useful life of 20 years, but does

not extend the useful life of the original structure with a

remaining life of 15 years, the improvement must be depreciated

over 15 years.

Note: Substantial remaining life for buildings is

10 years or more. Substantial life for other

structures or facilities is five years or

more.

(c) The useful life of the improvement is longer than

that of the original structure that has little or no remaining

life: If the original structure has little or no remaining life,

the improvement’s depreciation must be computed over either the

useful life of the improvement or the present* estimate of the

number of years over which the structure is expected to be used,

as determined by the Facility Manager, whichever is shorter (even

though the structure is fully or almost fully depreciated).

* The present estimate of the number of years over which

an asset is expected to be used must not exceed 30

years for buildings or 20 years for other structures.

Note: Little or no remaining life for buildings is

less than 10 years. Little or no remaining

life for other structures or facilities is

less than five years.

(d) The improvement extends the original structure’s

useful life: If the improvement is of such a nature as to extend

the original structure’s life, as determined by the Facility

Manager, the depreciation for the original structure’s remaining

useful life and for the improvement’s useful life must be

computed over the new “extended”* useful life.

* The extended useful life must not exceed 30 years for

buildings or 20 years for other structures.

Example: A building with an original cost of $300,000

and an estimated useful life of 30 years has

been depreciated for 10 years. The

accumulated depreciation is $100,000 and the

remaining useful life is 20 years. A

$150,000 improvement has increased the useful

life by 10 years and now the building’s

P2350.02

6/22/2004

Chapter 5, Page 3

remaining useful life is 30 years.

Accordingly, the building’s annual

depreciation is now $6,666.66 ($200,000

divided by 30 years) and the improvement’s

annual depreciation is $5,000 ($150,000

divided by 30 years).

(4) Capitalized Leasehold Improvements. Capitalized

leasehold improvements of buildings, other structures, or

facilities must be depreciated by the straight-line method. The

depreciation period is generally over the period of either the

remaining life of the lease or the estimated useful life of the

particular improvement to the original structure, whichever is

shorter, but not exceeding 20 years.

The Facility Manager must estimate the useful life, not to

exceed 20 years, of capitalized leasehold improvements. The

Facility Manager must make such estimations in writing. The

Controller is to ensure the determinations are maintained on file

to substantiate the depreciation periods.

(a) The lease’s remaining life is greater than that of

the leasehold improvement: If the remaining lease life is 20

years and the improvement has an estimated useful life of 15

years, the improvement must be depreciated over 15 years.

(b) The leases’s remaining life is shorter than that of

the leasehold improvement: Depreciate leasehold improvements

during the remaining lease life of the structure, even if the

improvement would increase the structure’s useful life. If the

remaining lease life is 10 years and the improvement has an

estimated useful life of 20 years, the improvement must be

depreciated over 10 years.

5.2 RECORDING DEPRECIATION IN THE GENERAL LEDGER. Depreciation

is computed and entered in the general ledger the first full

month following the month in which the asset is recognized. For

example, if the real property is put-in-use in April,

depreciation will commence and be entered into the general ledger

in May.

Depreciation entries are automatically generated monthly by the

SRPMS and transferred to the accounting system to effect the

following general ledger accounts:

P2350.02

6/22/2004

Chapter 5, Page 4

1739.10 Accumulated Depreciation - Buildings

1739.20 Accumulated Depreciation - Capital Improvement Bldg

1749.10 Accumulated Depreciation - Other Structures and Facil

1749.20 Accumulated Depreciation - Other Struc/Facil Cap Imp

1829.00 Accumulated Amortization - Leasehold Improvements

Manual entry of depreciation in the accounting system is not

required. Manual depreciation schedules and calculations are not

required.

P2350.02

6/22/2004

Chapter 6, Page 1

CHAPTER 6 - ADJUSTMENTS AND DISPOSALS

6.1 ADJUSTMENTS TO REAL PROPERTY AND DEPRECIATION BALANCES.

Since assets are recognized prior to a project’s financial

closure, the previously recognized amount must be compared to the

total project cost after all obligations are liquidated. If

there is a difference between the asset value recognized and the

total project cost when the project is ready to be closed,

adjustments to the real property record and the general ledger

accounts are required.

When recognized assets for a project do not equal the total

project cost, the Controller must notify the Facility Manager of

the difference amount and obtain from him or her a proper

allocation of cost differences. The Facility Manager must submit

an additional Asset Recognition form for the cost differences.

When adjustment amounts are determined and the Asset Recognition

form(s) received, the Property Officer must adjust the real

property values in SRPMS.

The Finance Branch, Central Office, receives SRPMS Management

Reports monthly. These reports reflect information on

transactions entered into SRPMS when the Finance Branch requires

prior period adjustments or other accounting corrections (as

described in Sections b. and c. below).

a. Adjustments to real property originally capitalized in the

current fiscal year. The Property Officer must enter or adjust

real property values (i.e., costs, acquisition dates, useful

life, etc.) in the SRPMS when Asset Recognition Forms are

received. When the SRPMS entry occurs, automated entries will be

generated to the accounting system to adjust the general ledger

asset and accumulated depreciation accounts appropriately.

If the real property amount is adjusted in SRPMS, accounting

staff must adjust the transferred-out amount in the B&F or AFF

appropriation, by entering a TC 5020B to X3 or X9, as

appropriate. In addition, a TC 5025B must be entered in the

current year S&E to transfer-in the amount of the adjustment.

If the cost of the asset is being increased, a positive TC

5020B and positive 5025B will be entered for the additional

amount. If the cost of the asset is being decreased, a negative

TC 5020B and negative 5025B will be entered for the reduction

amount. These entries will be fully documented and explained on

a JV.

P2350.02

6/22/2004

Chapter 6, Page 2

If a B&F or AFF project is funded at the Regional or Central

Office for work performed at an institution, the Regional or

Central Office OFM will prepare the TC 5020B and the local OFM

will prepare the TC 5025B. Both locations will prepare a JV to

document and explain their entries fully.

If the amount of Trust Fund funded real property is adjusted in

SRPMS, a corresponding TC 5026 must be entered in the X4

appropriation. A positive TC 5026 will be entered if the Trust

Fund asset’s cost is being increased. A negative TC 5026 will be

entered if the Trust Fund asset’s cost is being decreased.

b. Prior period adjustments of real property. These are

adjustments to an asset originally capitalized in a prior fiscal

year. Listed below are general prior period adjustment actions

for which the Finance Branch will enter depreciation expense

adjustments:

The date placed in service is in a prior fiscal year

and the acquisition amount is changed.

The date placed in service is in a prior fiscal year

and the useful life is changed.

An new asset is entered where the date in service is in

a prior fiscal year.

The date in service is changed (unless the original and

new date are both in the current fiscal year).

Entry of a disposal when the date of disposal was in a

prior fiscal year.

An asset’s reacquisition when the disposal of that

asset was in a prior fiscal year.

(1) Local procedures: The Property Officer must enter or

adjust real property values (i.e., costs, acquisition dates,

useful life, etc.) in the SRPMS when Asset Recognition forms are

received. When the SRPMS entry occurs, automated entries are

generated to the accounting system to adjust the general ledger

asset and accumulated depreciation accounts appropriately.

In the same month the real property values are adjusted in

SRPMS, accounting staff must adjust the transferred-out amount in

the B&F or AFF appropriation, by entering a TC 5020B to X3 or X9,

as appropriate. In addition, a TC 5025B must be entered in the

current year S&E to transfer-in the amount of the adjustment. If

the asset’s cost is being increased, a positive TC 5020B and

P2350.02

6/22/2004

Chapter 6, Page 3

5025B will be entered for the additional amount. If the asset’s

cost is being decreased, a negative TC 5020B and 5025B will be

entered for the reduction amount. These entries will be

documented and explained fully on a JV.

If a B&F or AFF project is funded at the Regional or Central

Office for work performed at an institution, the Regional or

Central Office OFM will prepare the TC 5020B and the local OFM

will prepare the TC 5025B. Both locations will prepare a JV to

document and explain their entries fully.

In addition, the local OFM must prepare and the Controller

must sign a JV requesting a prior period adjustment. The prior

period adjustment JV must be forwarded with attached supporting

documentation, to the Regional Comptroller. The supporting

documentation must include copies of all prior JVs completed for

the real property being adjusted and a copy of the SRPMS Real

Property Record Display screen.

(2) Regional Office procedures: The Comptroller must

review the requested prior period adjustment JV, and attached

documentation, for completeness and accuracy then forward it,

within five working days, to the Chief, Finance Branch.

(3) Finance Branch procedures: Finance Branch staff

receive SRPMS Management Reports listing prior period adjustment

events which Bureau locations entered into SRPMS. Finance Branch

staff match the prior period adjustment JVs local OFMs submitted

to information on the SRPMS Management Reports to determine and

approve the proper accounting adjustments. Adjustments to Trust

Fund real property will be routed through the Chief, Trust Fund

Branch, prior to the Finance Branch’s approval.

Finance Branch staff will enter the adjustment using a

Journal Module entry. If the total depreciation for the asset

has increased after the adjustment, the Finance Branch will make

the following Journal Module entry in current year S&E for the

amount of additional depreciation related to prior fiscal years.

7400.00 Prior Period Adjustments (dr.)

6710.10 Depreciation Expense - Real Property (cr.)

If the total depreciation for the asset has decreased after

the adjustment, the Finance Branch will make the following

Journal Module entry in current year S&E for the amount of

decreased depreciation related to prior fiscal years.

P2350.02

6/22/2004

Chapter 6, Page 4

6710.10 Depreciation Expense - Real Property (dr.)

7400.00 Prior Period Adjustments (cr.)

Depending on the individual circumstances of each requested

prior period adjustment, additional entries may be required. A

copy of the JV, approved by the Chief, Finance Branch, or

designee will be sent to the respective location’s Controller and

the appropriate Regional Comptroller.

c. Additional real property adjustment events. When Property

Officers make the following transactions in SRPMS for assets

entered in a prior year, Finance Branch staff need to review the

entries and make the necessary adjustments.

When an asset is entered incorrectly, the asset’s

disposal and acquisition to change the asset type.

(The Property Officer would replace “REP” the value of

the incorrect asset to zero then dispose of it. A new

record would then be entered with the correct asset

type.)

A change in the acquisition method of the asset.

For the above events, the Controller must submit a JV, through

the Regional Comptroller, to the Chief, Finance Branch,

requesting the Finance Branch make the proper accounting

adjustment. The JV must explain fully the actions taken and be

supported by documentation showing the transactions entered in

SRPMS.

The Finance Branch staff will review the JVs and SRPMS

Management Reports then prepare the appropriate accounting

entries and document and explain the corrective action taken.

Adjustments to Trust Fund real property will be routed through

the Chief, Trust Fund Branch, prior to approval by the Finance

Branch. A copy of the approved JV will be sent to the respective

location’s Controller or Comptroller after entry into the

accounting system.

6.2 ADJUSTMENTS TO EXPENSE PROJECTS

a. Adjustments to current year expenses. If an adjustment to

a B&F or AFF project is required to correct expenses that should

be properly recorded in the current period, the local OFM must

prepare a JV which explains the adjustments and shows the proper

TC 5020A and TC 5025A entries. This JV may then be approved and

entered locally. (See Chapter 3 of this Program Statement for

proper accounting of expense projects.)

P2350.02

6/22/2004

Chapter 6, Page 5

If a B&F or AFF project is funded at the Regional or Central

Office for work performed at an institution, the Regional or

Central Office OFM will prepare the TC 5020A and the local OFM

will prepare the TC 5025A. Both locations will prepare a JV to

document and explain their entries fully.

b. Adjustments to prior year expenses. Locations will not

enter any transactions for prior period expense adjustments until

approval is received from the Chief, Finance Branch, or designee.

If expense recognition entries made in a prior fiscal year

should not have been entered, were for the wrong amount, or

proper expense recognition entries were not completed during a

prior fiscal year, the local OFM must complete the following.

Prepare a JV with the correcting accounting transactions (TC

5020A and TC 5025A) and a clear and detailed explanation of the

correction, with attached supporting documentation, and send it

immediately to the Regional Comptroller. Then, the Comptroller

will review, for completeness and accuracy, and forward the

documentation, within five working days, to the Chief, Finance

Branch, for approval.

The Finance Branch staff will assign a Finance Branch JV number

and document and explain these adjustments. After approval, a

copy of the JV will be sent to the respective location’s

Controller and the appropriate Regional Comptroller and indicate

the entries required of the local OFM.

6.3 ASSET DISPOSAL. The real property that is disposed of or

otherwise removed from service must be removed from the asset

account along with the associated accumulated depreciation. The

difference is to be recognized as a gain/loss in the period of

disposal. Refer to SFFAS No. 6.

The only authority by which real property may be removed from the

general ledger is a properly executed and approved Report of

Survey. Refer to the Property Management Manual and Facilities

Operations Manual for information on disposing of real property.

The accounting entries required to recognize the gain or loss and

remove the real property and accumulated depreciation from the

general ledger are generated automatically from the SRPMS. The

Property Officer must enter the disposal transaction in SRPMS in

the month which the report of survey is approved.

P2350.02

6/22/2004

Chapter 7, Page 1

CHAPTER 7 - ACCOUNT RECONCILIATION

7.1 ACCOUNT RECONCILIATION. Reconciliation of all real property

accounts and related accumulated depreciation will be completed

each month on the proof-check. Capitalized real property

accounts will be reconciled with SRPMS Real Property reports and

depreciation will be reconciled with SRPMS Depreciation reports.

In addition, the OFM must reconcile monthly the Construction in

Progress Accounts and the Transferred Property Accounts for the

B&F and AFF appropriations.

a. SGL Account 1720.10, Construction in Progress—Open, must be

reconciled to the total cumulative open project amounts on the

BOPRPT73 report, Cost by Project. This SGL account represents

the total costs associated with all open B&F projects.

b. SGL Account 1720.20, Construction in Progress—Complete,

must be reconciled to the tape of the total of all Asset

Recognition forms for open projects, provided by the Property

Officer, plus JVs for open project costs which have been expensed

in the general ledger.

In addition, this account must equal the total Recognized

Amount from the BOPRPT73 for open projects. This SGL account

represents the recognized costs associated with all open B&F

projects.

c. SGL Account 5730.21, Financing Sources Transferred out

without Reimbursement - Non-Capitalized, is used in the B&F or

AFF appropriation and reflects the amounts transferred out to be

recognized as expenses in S&E. The SGL Account 5720.21 -

Financing Sources Transferred in without Reimbursement - Non-Capitalized, is used in the S&E appropriation and reflects the

amounts transferred in from B&F or AFF.

These two accounts must be reconciled and differences, although

they may be proper, must be identified and explained. Proper

differences would be for costs transferred out of the Regional or

Central Office and transferred in to institutions.

d. SGL Account 5730.22, Financing Sources Transferred out

without Reimbursement - Capitalized, is used in the B&F or AFF

appropriation and reflects the amounts transferred out to be

recognized as real property in S&E. The SGL Account 5720.22,

P2350.02

6/22/2004

Chapter 7, Page 2

Financing Sources Transferred in without Reimbursement -

Capitalized, is used in the S&E appropriation and reflects the

amounts transferred in from B&F or AFF.

These two accounts must be reconciled and differences, although

they may be proper, must be identified and explained. Proper

differences would be for costs transferred out of the Regional or

Central Office and transferred in to institutions.

7.2 FILING OF B&F AND AFF PROJECT DOCUMENTS. Each OFM must

maintain a separate file folder for each B&F and AFF project.

The file folder must contain copies of all actions taken on that

project, including the memo signed by the Facility Manager and

Controller to determine if project costs will be capitalized or

expensed and, if applicable, Asset Recognition Forms, JVs,

generic entries, the Request to Close a B&F Project, and the

Request for Financial Closure memo from the Facility Manager.

P2350.02

6/22/2004

Attachment A

ASSET RECOGNITION FORM

DATE:

MEMORANDUM FOR: , Controller

Institution

FROM: , Facility Manager

SUBJECT: Notification of Asset Put-in-use/Substantially

Completed for Project,

(code) (name of project)

This is the Asset Recognition Form for this project.

(first, second, etc.)

Description of: (check one)

Real Property Put-in-use/Substantially Completed to be

entered into SRPMS, or

Capitalized Personal Property Purchased with project

funds to be entered into SPMS.

Description:

Amount Put-in-use to be Capitalized $

Previous Assets Recognized on this project $

(To be verified against previous Asset Recognition Forms)

Total $

Type of Property (Circle One)

Land, Building, Other Structure, Improvement-Building,

Improvement-Other Structures, or Leasehold Improvement

Date Real Property put-in-use/substantially completed / /

Estimated Useful Life (for improvements only) Years

Improvement Increases Useful Life of Original Building Y N

(if yes) Number of Years

Physical measurement of Real Property, i.e. square footage

(for new assets or improvements which increase square footage)

TO BE COMPLETED BY THE OFFICE OF FINANCIAL MANAGEMENT JV#

Entrie s to Transfe r Amoun t to be capitalized:

A sset

T C SX FI FO FY Fund A ctC lass PGM Proj R C N SOC Schedu le A mt D esc

502 0 B

502 5 B

_ _ X 3 FP0 X X X X X PX *** NA N A JV _ _ _ _ $XX X RecogAsset *** JV ___

or X9 or PZ

_ _ 02 FP0 X X X X X P1 NA NA N A JV _ _ _ _ $XX X RecogAsset *** JV ___

OR for T rust Fund funded real pro perty

5026 _ _ X 4 FP0 X X X X X V 8 CM S NA N A JV _ _ _ _ $X X X RecogAsset X X X JV ___

______________________________ , ______________________________ , Approved

Prepare r Controlle r or Comptroller

______________________________ , Date, Date

P2350.02

6/22/2004

Attachment B

LOCATION:

DATE PREPARED:

PREPARED BY:

APPROVED BY:

JV#

SEPTEMBER RECOGNITION OF B&F EXPENSES

(A) PROJECT

#

(B) BOPRPT73 9/20

current FY

unrecognized amt.

1. $

2. $

3. $

4. $

TOTAL $

A) Only B&F and AFF projects to be expensed that are open as of

9/20 of the current FY (or the first working day thereafter)

should be listed on this table.

B) List the unrecognized amount from the BOPRPT73 as of 9/20 of

the current FY (or the first working day thereafter) for the open

B&F and AFF projects to be expensed.

Prepare the following accounting entries for each project listed.

TC 5020A in B&F or AFF to transfer out costs to be expensed and a

TC 5025A to recognize the expense in S&E.

E xp

T C SX FI FO FY Fund A ctC lass PGM Proj R C N SOC Schedu le A mt D esc

502 0 A _ _ X 3 FP0 X X X X X PX *** NA N A JV _ _ _ _ $XX X RecogExp *** JV ___

or X9 or PZ

502 5 A _ _ 02 FP0 X X X X X P1 NA NA N A JV _ _ _ _ $X X X Reco gEx p *** JV ___

,

Prepared by Date

, Approved

Controller or Comptroller Date

P2350.02

6/22/2004

Attachment C

SAMPLE REQUEST FOR FINANCIAL CLOSURE

DATE

MEMORANDUM FOR, CONTROLLER

, LOCATION

FROM: , Facility Manager

SUBJECT: Notification of Final Completion on B&F Project

(Project code) (Name)

I certify that the project referenced above is 100% complete. All

construction, deliveries, and cancellations have been completed

and no additional obligations, including salaries, will be

incurred against this project.

All charge card purchases for this project have been received.

Please set up an accrual for the following charges that have not

been reflected on the monthly charge card statement.

Awaiting Settlement of Purchase Card Charges:

$ Amount Vendor

Received:

,

Controller Date

P2350.02

6/22/2004

Attachment D

REQUEST TO CLOSE A B&F PROJECT

DATE

MEMORANDUM FOR, REGIONAL COMPTROLLER

REGION

FROM: , Controller

(Location)

SUBJECT: Request to Close B&F Project,

(Project code and name)

Initial Allotment $

Supplemental Allotment

Allotments From Other Projects

Allotments To Other Projects

Total $

Net Allotment Available (from EAPRJ102 report)

Total Obligations Incurred (from EAPRJ102 report)

Unobligated Balance to be Contra-Allotted (from

EAPRJ102 report)

List and Value of Inventory not Utilized

Recommendation for Disposition of Inventory not Utilized

TO BE COMPLETED BY THE OFFICE OF FINANCIAL MANAGEMENT

All costs were recognized prior to financial closure on

JV(s). The following entry will remove

Construction-in-Progress Balances: TC 5022 date entered.

T otal Proj

T C SX FI FO FY Fund A ctC lass PGM Proj R C N SOC Schedule A mt D esc

5022 _ _ X 3 FP0X X X X X PX *** NA N A JV _ _ _ _ $X X X Close ***JV _ _ _ _

or X9 or PZ

(*** represents the project code)

This amount must equal the total cost of the project as reflected

on the BOPRPT73 report, Cost by Project.

Entry to contra-allot the project’s unobligated balance.

TC 0211 date entered.

U nO bl

T C SX FI FO FY Fund A ctC lass P G M Proj R C N SOC Schedule A mt D esc

0211 _ _ X 3 FP 0X X X X X P X *** N A 1100 allot# ( $X XX ) C ontra-allot ***

or X 9 or PZ or 2600

(*** represents the project code)

, Approved

Regional Comptroller Date