Search Book

Contents

 

About This FAM

Responsible Agency: Office of the Comptroller General
Issued: Nov 2006
Last Updated: Aug 2009

1. Introduction

Significant events such as accidents and destruction caused by severe weather, etc. may cause the partial impairment or total loss of an asset. Such events must be reflected in the valuation if the asset can no longer contribute to program or service delivery at the level previously anticipated.

Write-downs or write-offs may also occur due to change in use, obsolescence or cessation of a program.

2. Policy

The responsible department shall reduce the carrying value of any Tangible Capital Asset (TCA) where there has been a partial impairment, or total loss of an asset.

3. Directives

3.1 A write-down must be recorded when a reduction in the value of a TCA can be objectively measured.
3.2 Any write-down of a TCA must be charged to a Vote 3 (Amortization) appropriation (i.e. expensed) in the period during which the value was reduced.
3.3 A TCA write-down must not be reversed.
3.4 A write-off must be recorded when a TCA is destroyed, stolen, lost, or obsolete to the Government.
3.5 To keep an incomplete TCA project in active status, postponed projects with an approved plan in the capital budget must be written-down to the net realizable value and charged to the period in which the postponement occurs.
3.6 Abandoned projects must be written off in the period they are abandoned.
3.7 Where a reduction in the value of a TCA can be objectively measured, the TCA must be writtendown to the revised estimate of the value of the asset’s remaining service potential.
3.8 A write-down or write-off of a TCA requires approval by a properly authorized officer with the delegated authority to deal with obsolete, surplus or written-off items.
 

4. Guidelines

4.1

longer be expected to permanently contribute to program or service delivery at the level previously anticipated. Conditions that may indicate that a write-down is appropriate include:

  • a change in the manner or extent to which the TCA is used;
  • physical damage;
  • removal of the asset from service;
  • significant technological developments;
  • a decline in or cessation of the need for the service provided by the asset (may also be a write-off); and,
  • a change in the law or environment affecting the extent to which the asset can be used.
4.2 When the Government has no intention of continuing to use the asset in its current capacity, and there is no alternative use for the asset, it should be written-off.
 

5 . Authorities and References

  • FAM 2201
  • PSAB (PS 3150.32-.38)

6 . Consequences from Failure to Comply

Failure to comply with policies and directives of the Financial Administration Manual may result in actions under Part X of the Financial Administration Act. The Government of the Northwest Territories may seek legal remedy in the Territorial Courts.