Real Property and Financial Management Guide

Table of Contents

1. Purpose and Background

2. Authorities

3. Responsibilities

4. Effective Date/Transition Period/Exceptions

5. Policy

6. Property Classifications

7. Capitalization Criteria

8. Records

9. Valuation

10. Depreciation

11. Estimated Useful Life

12. Transaction Dates

13. Maintenance

14. Appendix A - Performance Measures

15. Appendix B - Property Classifications Defined for Purposes of RPFMP

16. Appendix C- World Wide Inventory Real Property Profile (GSA Form 1166)

1. PURPOSE AND BACKGROUND.

   The purpose of this guide is to provide implementing guidance for the U.S. Department of the Interior Real Property Financial Management Policy (RPFMP), as amended in June 2003. (The original policy was issued on April 30, 2003.)

   Beginning with the Chief Financial Officers' Act of 1990, the Federal government has passed legislation increasing the financial accountability of Federal entities, including the control, accountability, and financial reporting of real property. The timeliness, accuracy and completeness of real property data are critical to the Department of the Interior's ability to justify its funding requests and to verify its accomplishments. Additionally, this data must pass the test of an annual financial statement audit in order for the Department to maintain an unqualified audit opinion.

   The Office of Acquisition and Property Management (PAM), in collaboration with the Office of Financial Management (PFM), prepared this guide to assist you in collecting, documenting, and providing accurate and complete real property inventory and financial data.

   Please Note: This guide addresses real property only, i.e., any interest in land, together with improvements, structures and fixtures, appurtenances, and improvements of any kind located thereon.

2. AUTHORITIES.

   This guidance supports the requirements of SFFAS Number 3, "Accounting for Inventory and Related Property," SFFAS Number 6, "Accounting for Property, Plant and Equipment" (as amended by SFFAS Numbers 11 and 16), and SFFAS Number 8, "Supplementary Stewardship Accounting" (as amended by SFFAS Numbers 11 and 16). The SFFAS standards .

3. RESPONSIBILITIES.

   Assistant Secretaries, Bureau Directors, bureau financial officers and program managers all have a role in ensuring that real property is properly managed and reported and that real property and financial records are reconciled. The roles and responsibilities below can only be accomplished through close cooperation among all parties. This list focuses on financial-related responsibilities and does not include all responsibilities, e.g., safeguarding assets.
    

   1. What tasks are Bureau Directors responsible for?

      Bureau Directors shall:
       

      1. Certify on an annual basis, as part of their bureau's Management Control Assurance Statement as to the accuracy and completeness of real property inventories performed by the bureau during the reporting period;
          
      2. Ensure that accounts are reconciled;
          
      3. Ensure that adequate financial controls are in place;
          
      4. Ensure that financial records and reports accurately reflect the status of real property in accordance with the Department of the Interior's (DOI) RPFMP; and
          
      5. Approve bureau plans ensuring that 100 percent of real property assets are inventoried over a five year period.
         NOTE: The above responsibilities may not be delegated.
          
   2. What tasks are Assistant Directors – Administration (ADA)(or equivalent) responsible for?

      In addition to the responsibilities identified in D. below, Assistant Directors – Administration (or equivalent) shall:
       

      1. Allocate sufficient resources to conduct all phases of physical inventories and reconciliations to ensure property data recorded are accurate and complete, and the general ledger balances for real property are adequately supported;
          
      2. Ensure the organization and management of personnel tasked with coordinating, performing, and reporting of the physical inventory verification;
          
      3. Ensure that physical inventories and monthly reconciliations are accurate, complete, completed within established time frames and in compliance with other requirements of DOI's RPFMP; and
          
      4. Submit a plan to the Bureau Director that ensures that the bureau has planned real property inventories for 100 percent of its real property assets over a five year period.
          
      5. Ensure that bureau real property performance accomplishments are properly accounted for in monthly reports to the Office of Acquisition and Property Management.
          
   3. What tasks are Chief Financial Officers of bureaus and offices responsible for?

      Chief Financial Officers of bureaus and offices shall:
       

      1. Ensure that adequate financial controls are in place and financial records and reports accurately reflect the status of real property in accordance with the Department of the Interior's RPFMP;
          
      2. Ensure independent control of data in the accounting system;
          
      3. Reconcile accounting system data to the official real property subsidiary records at least monthly;
          
      4. Maintain documentation of account reconciliations. Documentation must be available for review by auditors;
          
      5. Maintain financial records in cooperation with property managers and facility managers for each capital facility project (i.e., any real property asset or capital improvement project with an overall cost of $100,000 or greater) in progress. These records are the source for entries to the general ledger work in progress accounts. The Contracting Officer or his/her Representative (i.e., Contracting Officer's Representative/Contracting Officer's Technical Representative), in consultation with the appropriate real property official, is responsible for furnishing information to identify costs applicable to construction in progress (CIP);
          
      6. Support the bureau's real property inventory planning process to ensure that real property inventories are planned for 100 percent of real property assets over a five year period; and
          
      7. Maintain close liaison with property management, facilities management and other personnel concerned with real property to provide assurance that values reported are accurate.
          
   4. What tasks are persons who manage real property responsible for?

      Persons who manage real property shall:
       

      1. Ensure that real property accounts are reconciled and inventories are documented;
          
      2. Maintain all records related to real property, including records of financial transactions related to real property;
          
      3. Reconcile official real property subsidiary system data to accounting system data at least monthly;
          
      4. Contribute to the preparation of the bureau's real property inventory planning process to ensure that real property inventories are planned for 100 percent of real property assets over a five year period;
          
      5. Perform physical inventories. Inventories must be reconciled with financial and other real property records. The Bureau ADA, accountable officer or designee, must certify the accuracy of the results throughout the management control reporting period. The Bureau Director must certify the accuracy of the results annually as part of the bureau's management control assurance statement. Physical inventory plans must be coordinated with the Office of Inspector General and third party auditors. Notice Regarding Segregation of Duties: Persons responsible for maintaining financial and other property records should not be the same persons who physically verify assets;
          
      6. Maintain documentation of physical inventories. Documentation must be available for review by auditors;
          
      7. Ensure the establishment and maintenance of real property accountability records to provide for effective and overall control;
          
      8. Enforce measures to prevent loss, misuse or abuse of real property; and
          
      9. Maintain close liaison with Chief Financial Officers and other personnel concerned with real property to provide assurance that values reported are accurate.
          

4. EFFECTIVE DATE/TRANSITION PERIOD/EXCEPTIONS.
    
   1. What is the effective date of the Real Property Financial Management Policy (RPFMP) on which this guide is based?

      The policy was effective upon issuance, April 30, 2003. However,
       

      1. capitalization thresholds identified in the policy are effective for transactions that occur after October 1, 2003; and
          
      2. new useful lives for real property are effective October 1, 2003. NOTE: Useful lives of currently held real property need not be changed to reflect the new useful lives. Depreciation is changed prospectively, thus no change is required for accumulated depreciation reported to date.

         Early implementation of the RPFMP may be requested by bureaus/offices by following the procedures outlined in IV.E., below.
          

   2. Is the RPFMP, or any portion of it, e.g., thresholds, retroactive?

      No, the RPFMP is not retroactive.
       

   3. Will a transition period be allowed for bureaus/offices to implement the new real property policy issued on April 30, 2003?

      Yes, upon approval of the Director, Office of Acquisition and Property Management (PAM), bureaus/offices may be authorized, on a case-by-case basis, a transition period to implement the new real property financial management policy. For example, some bureaus/offices may need a transition period to adjust to monthly reconciliations, establish new systems, train appropriate personnel, etc.

      Bureau/office requests to implement a transition period must:
       

      1. be in writing and signed by the Bureau Director;
          
      2. clearly state the reason(s) why a transition period is required; and
          
      3. provide a suggested transition timeframe, supporting rationale, and implementation date(s).

         The Director, PAM, will make the final decision on the request.
          

   4. Will any exceptions be granted to the RPFMP?

      The Director, PAM and the Director, Office of Financial Management (PFM) will consider granting specific exceptions to the policy based on written request. Only the Director, PAM, may grant exceptions to the policy.
       

   5. How do I request an exception and what is required?

      Requests for exceptions to the RPFMP must be submitted in writing by a Bureau/Office Director, and show sufficient and satisfactory reason to support the exception. The request packages must also include an analysis of the impact of the requested exception on the bureau/office financial statement. Requests for exceptions must be submitted to the Director, Office of Acquisition and Property Management at the following address:

      U.S. Department of the Interior
      1849 C Street, NW, (MS 5512)
      Washington, DC 20240
       

   6. Will bureaus/offices be monitored on the implementation of the policy?

      Yes, bureau/office implementation of the RPFMP will be monitored. Among other methods, bureau/office real property management accomplishments will be monitored through reports on a series of related performance metrics.
       

   7. What are the performance metrics reporting requirements related to real property management accomplishments? When are reports due?

      Bureau ADA's (or equivalent) must submit reports on their bureau's real property management accomplishments in the performance metric areas on a monthly basis beginning October 1, 2003. Reports shall be provided to the Director, PAM. (Refer to Appendix A for the specific performance measurement metrics.)
       

5. POLICY.
6. Real property owned or leased by the Department of the Interior (DOI) must be properly accounted for in real property accountability records. Any changes to real property owned or leased by DOI must be tracked and reflected in real property accountability records. Each real property acquisition, improvement, construction, donation, transfer or upgrade that meets the overall capitalization criteria will be recognized in the financial records and depreciated.
    
7. < >What is real property?

   Real property is any interest in land, together with improvements, structures and fixtures, appurtenances, and improvements of any kind located thereon. The term "real" should be associated with realty, land, or something attached thereto.
    

7. CAPITALIZATION CRITERIA.

   The content for the Capitalization Criteria section of this policy has been replaced by the following policy document: DOI-AAAP-0122, Property, Plant, and Equipment - Capitalization Criteria

8. RECORDS.
    
   1. Standard General Ledger (SGL) Accounts.
       
      1. What kind of real property transactions are to be recorded in the general ledger?

         Accounting transactions affecting DOI-owned and leased real property, whether DOI- or contractor-held, shall be recorded in general ledger asset accounts in accordance with the DOI Real Property Financial Management Policy.
          

      2. What are the standard general ledger accounts for real property?

         The standard general ledger accounts for real property are provided below:

9. VALUATION.
    
   1. What is the general rule for estimating value for capitalization purposes?

      Each real property acquisition, addition, improvement, alteration, rehabilitation or replacement is to be treated as a single event. The total cost of each single event should be used to determine whether it meets the capitalization criteria, regardless of when payment is made. If the event meets the criteria for capitalization, all costs incurred in relation to that event, regardless of when they are paid, will be recorded in general ledger accounts. The total cost of a project, e.g., a building, will be considered a single event regardless of whether the work was performed through multiple contracts. (Refer to section VII.A. "Capitalization Criteria.")
       

   2. What goes into calculating the capitalized value of real property?

      Capitalized values of assets purchased or constructed by DOI shall include all costs paid for the property, the value of other assets surrendered in order to obtain the property and all other costs incurred to bring the real property to a form and location suitable for its intended use, i.e., the total cost to DOI. These costs include but are not limited to:

      < >amounts paid to vendors or contractors, including fees;

      transportation charges to the point of initial use;

      handling and storage charges;

      labor and other direct or indirect production costs (for assets produced or constructed);

      engineering, architectural, and other outside services for design, plans, specifications, and surveys;

      acquisition and preparation costs of buildings and other facilities;

      an appropriate share of the cost of equipment and facilities used in construction work including depreciation;

      fixed equipment and related costs of installation required for activities in a building or facility;

      direct costs of inspection, supervision, and administration of construction contracts and construction work;

      legal and recording fees and damage claims; and

      material amounts of interest costs paid.

      How do I assign value to a donation?

      Assets donated to DOI are recognized at the fair market value of the property plus any other costs incurred by the Government related to bringing the donated property to a form and location suitable for its intended use. (For examples, see the above listing of costs.)
       

   3. How do I assign value to volunteer time?

      The value of volunteer time is based on the average hourly earnings of all nonagricultural workers as determined by the Bureau of Labor Statistics, and is updated annually. The DOI uses as its standard for determining volunteer wage equivalents, INDEPENDENT SECTOR, an independent volunteer organization. INDEPENDENT SECTOR takes the Bureau of Labor Statistics figure and increases it by 12 percent to estimate for fringe benefits. In 2002, for example, the dollar value for volunteer time was $16.54 per hour. The current dollar values associated with volunteer time can be found at:independentsector.org/programs/research/volunteer_time.html
       

   4. How do I assign value to real property obtained under a capital lease?

      The value assigned to real property obtained through capital leases includes all costs directly attributable to making a capital asset available to the lessee, including, but not limited to:
       

   5. < >finance charges, including interest;
      

      ancillary costs such as delivery and installation charges; and
      maintenance costs

      How do I assign value to a trade-in?

      Where capitalized property or collateral equipment is traded for another piece of property or capitalized collateral equipment, the capitalized value of the new asset will be amounts paid plus the net book value of assets traded in.
       

   6. How are discounts factored in?

      The capitalized value will be net of discounts taken.
       

   7. How is value assessed for barter transactions?

      Barter transactions are transactions where both sides relinquish assets other than cash, for example, transactions trading land in different locations is a common barter transaction. Barter transactions will be recognized at the fair market value of property surrendered or property received, whichever is more readily determinable. Property acquired in a barter transaction should be capitalized in accordance with section VII. A."Capitalization Criteria."

10. Depreciation
     
    1. What is “depreciation” and what does it have to do with capitalization?

       Depreciation is a reasonable allowance for exhaustion, wear and tear, and obsolescence, taken by the owner of a property and by which the cost of property is allocated over time. Depreciation decreases balance sheet assets and is also recorded as an operating expense for each period.

       Capitalized real property, including buildings, structures and facilities, is depreciated over time in order to allocate the costs of assets to the activities and time periods expected to benefit from the use of the property. Depreciation is an important component of the full cost of activities for financial and performance reporting. In addition, management is expected to consider depreciation along with other cost elements when establishing reimbursable agreements and repayment contracts.
        

    2. How is depreciation computed?

       Depreciation is computed using the straight-line method (i.e., a method of depreciation that assumes an asset will lose an equal amount of value each year. It is calculated by taking the purchase price of an asset subtracted by the salvage value and divided by the asset’s useful life.), or other acceptable method as approved by the Director, PAM. Depreciation is calculated and accounted for by recognizing an entry to depreciation expense and accumulated depreciation. (Refer to “salvage value” in question E below.)
        

    3. What is the frequency for computing and recognizing depreciation?

       Depreciation will be computed and recognized on a monthly basis.
        

    4. When does depreciation begin for new assets?

       Depreciation of capitalized real property will begin the month that the assets are placed in service.
        

    5. What is meant by “salvage value”?

       Salvage value is the expected sale price of an asset at the end of its usefulness to the agency. The portion of an asset’s value assumed to be salvage value is not depreciated.

       NOTE: Generally, Federal assets are used as long as possible and are rarely sold by the agency to the public for a price. Therefore, the salvage value of DOI real property is assumed to be $0 unless documentation supporting an expected specific salvage value is included in the asset’s official file.
        

    6. Are there exceptions to the application of depreciation to real property?

       Yes, land, land rights and permanent improvements to land such as roadbeds do not lose value over time and are therefore not subject to depreciation. No depreciation is recognized for these assets.
        

    7. Is there a special exception that applies to water projects subject to user charges?

       Yes, the computation of depreciation on these projects must be determined in accordance with the appropriate statutory, regulatory and contractual terms governing project repayment and would not necessarily be computed on the straight-line method. If statutory, regulatory and contractual terms do not reflect a reasonable useful life, consult with your Bureau Chief Financial Officer to determine the appropriate period. The method for computing depreciation on this type of project and/or its components must be documented and consistently applied within the limits of the statutory and regulatory framework.

11. ESTIMATED USEFUL LIFE.
     
    1. What is the relationship between estimated useful life and depreciation?

       In calculating the depreciation of an asset, you must consider its estimated useful life. Useful life applies to assets acquired in new condition. Assets acquired in used condition are depreciated over their expected remaining useful life.
        

    2. Has DOI established some standard useful life ranges for certain types of real property assets?

       Yes, DOI has made a determination of the standard range of useful lives for the following major asset types. Examples of individual asset types are also provided in the following table. NOTE: If an asset has special considerations or is not listed in the following table, a memorandum from a qualified facility management professional to document an alternative useful life should be placed in the property file or record.

12. TRANSACTION DATES.
     
    1. What are the policies and procedures regarding "acquisition date"?

       Transactions involving the acquisition of real property are to be recognized in the accounting records and official property subsidiary records within ten working days of acquisition, but in no case, later than the last day of the month in which the transaction occurs.
        

       1. The acquisition date of purchased real property is the date that title passes to DOI.Title shall be considered to be passed when the authorized government official accepts the property for the agency.
           
       2. The acquisition of constructed real property is the date that the asset is accepted or placed in service. This is defined as the date that the certificate of occupancy is signed by the authorized government official.
           
    2. When is real property constructed for DOI recorded in the general ledger, and how is it handled?

       In the case of real property constructed for DOI, it shall be recorded in the general ledger as construction work in progress until it is placed in service by DOI, at which time the balance will be transferred to real property. The authorized government official accepting the property is normally the Contracting Officer or that Officer's designated representative, who is responsible for notifying the Real Property Officer of the acceptance.

       Capitalization of construction work in progress will not be delayed pending final acceptance of residual closeout work such as punch lists. At fiscal year-end, special care shall be taken to ensure than any assets meeting the timing of capitalization criteria are capitalized regardless of whether there are remaining costs to be paid. The amount capitalized should be the costs incurred to date that meet the requirements in Section IX, Valuation of the DOI RPFMP and this guide. However, all appropriate costs (as defined in the "Valuation" section), including any unpaid vouchers remaining at the time of acceptance, will subsequently be included in the total cost of the asset since construction of real property is treated as a single event.
        

    3. How is obsolete or unserviceable real property handled?

       Real property assets that no longer provide service in the operation of the entity will be removed from the accounts. Obsolete real property shall be recorded in an appropriate asset account at its expected net realizable value. Any difference in the book value of the PP&E and its expected net realizable value shall be recognized as a gain or loss in the period of adjustment. The expected net realizable value shall be adjusted at the end of each accounting period and any further adjustments in value recognized as a gain or a loss. However, no additional depreciation/amortization shall be taken once such assets are removed from general PP&E in anticipation of disposal, retirement, or removal from service.
        

    4. What is the policy regarding the handling of real property not in use?

       Real property assets disposed of, retired or removed from service by DOI will be removed from the real property accounts. The bureau's Real Property Officer shall notify the bureau's Deputy Chief Financial Officer in writing when real property for which DOI is accountable is no longer being used for DOI purposes. Assets to be sold or transferred will be reclassified to another appropriate asset account until sold or transferred. Assets to be disposed of will be written off. The bureau's Deputy Chief Financial Officer shall remove the capitalized cost of the real property and related accumulated depreciation from the accounting records upon receipt of notification. The bureau's Real Property Officer shall also notify his/her respective Deputy Chief Financial Officer in the unlikely event that the real property is returned to active DOI use, so that it can be returned to capitalized status in the accounting records. In this case, the Deputy Chief Financial Officer will initiate actions to return the real property assets to a capitalized status in the accounting records.
        

    5. What is the policy regarding disposal of real property?

       When real property has been sold, abandoned, or destroyed, the property must be removed from the property records and an appropriate accounting transaction must be recorded to reflect the disposition of the property and any related gain or loss. The same treatment is necessary when property has been declared excess and accountability transferred to another Federal agency. Cash received as a result of sale or transfer will be handled in accordance with appropriate budget rules. Real property disposal will be accomplished in accordance with Federal Property Management Regulation, 41 CFR, section 101-47.
        

    6. Substance versus form: What happens if official paperwork transferring title or documenting acceptance is delayed?

       Transactions are to be recorded when they occur, as discussed above. However, in some cases official paperwork transferring title or documenting acceptance is delayed for an extended period of time. For example, in some cases a building is occupied by employees and used for its intended purpose for several years even though facilities management personnel have not formally accepted the building awaiting final repairs or improvements by the contractor. This building would be considered to be in service and would be recognized as a DOI asset. The following general rule applies: If a building or structure is complete and in use by DOI for its intended purpose, delays in paperwork are not a justification for failure to recognize the asset in official accounts.

13. MAINTENANCE.
     
    1. What is maintenance?

       Maintenance is the act of keeping assets in usable condition. Maintenance includes preventive maintenance, emergency and scheduled repairs, replacement of parts and structural components, e.g., a roof, HVAC, and other activities needed to preserve the asset so that it continues to provide acceptable services and achieves its expected life.
        

    2. What does maintenance exclude?

       As pointed out in section VII.B.1.(c)(2) of this guide, maintenance excludes activities aimed at expanding the capacity of an asset or otherwise upgrading it to serve needs different from, or significantly greater than, those originally intended.
        

    3. Are maintenance activities capitalized or expensed?

       As indicated in section VII.B.1.(c)(2), maintenance activities shall be expensed.
        

    4. What is "deferred maintenance"?

       Deferred maintenance is maintenance that was not performed when it should have been or was scheduled to be performed and has been delayed for a future period.
        

    5. How will amounts reported for deferred maintenance be determined?

       Amounts reported for deferred maintenance will be determined using the "Condition Assessment Survey" method.
        

    6. What is a Condition Assessment Survey?

       A Condition Assessment Survey is the periodic inspection of real property to determine its current condition and provide a cost estimate for any necessary repairs.
        

    7. What are the deferred maintenance supplemental stewardship reporting requirements?

       The following information shall be presented as Required Supplementary Information:
        

       1. Identification of each major class of asset for which maintenance has been deferred. ("Major classes" of general PP&E shall be determined by the entity. Examples of major classes include, among others, buildings, structures, and land.)
           
       2. Method of measuring deferred maintenance for each major class of real property.
           
       3. If the Condition Assessment Survey Method of measuring deferred maintenance is used, the following must be provided:
           
          1. description of requirements or standards for acceptable operation condition;
              
          2. description of any changes in the condition requirements; and
              
          3. asset condition and a range estimate of the dollar amount of maintenance needed to return it to its acceptable operating condition.

14. Appendix A -Bureau Performance Measures – Real Property
     
    1. Who is responsible for the real property performance measures?

       Assistant Directors -Administration (ADA), or equivalent positions in each bureau/office, are responsible for implementing and tracking performance measures for real property management. Real property and financial managers must be aware of the measures and be held accountable for meeting the measures.
        

    2. What is the purpose or end outcome of the performance measures for real property?

       To ensure that adequate financial controls are in place and financial records and reports accurately reflect the status of real property.
        

    3. What is the overarching purpose for the real property performance measures?

       To improve the Department's real property management program and consistently obtain clean audit opinions on real property financial accounting.
        

    4. How often are reports required on the property real property performance measures?

       The Bureau ADA is required to report monthly on bureau accomplishments. This is consistent with the requirement for real property and financial management reconciliation that is also required at the end of each month.
        

    5. What are the reportable performance measures and objectives?

15. Appendix B - Property Classifications Defined for Purposes of RPFMP
     
    1. Buildings, Structures and Facilities
        
       1. Buildings, Improvements, and Renovations. Buildings are defined as structures with a roof and commonly enclosed by walls, designed for storage, human occupancy, or shelter for animals, distinguished from other structures not designed for occupancy (such as fences or bridges). Buildings include offices, warehouses, post offices, hospitals, prisons, schools, housing and storage units. Fixed equipment that is permanently attached to and a part of the operation of the building, and cannot be removed without cutting into the walls, ceilings or floors is also included. Examples of fixed equipment required for functioning of a building include plumbing, heating and lighting equipment, elevators, central air conditioning systems and built-in safes and vaults. The cost of Federal Government-owned buildings acquired for and used in providing Federal Government services or goods includes the cost of acquisition, renovation, improvements, restoration, or reconstruction of multi-use heritage assets, when those costs are directly tied to the conduct of Federal Government operations.
           
       2. Structures and Facilities.Structures and facilities include such things as airfield pavements, harbor and port facilities, power production facilities and distribution systems, reclamation and irrigation facilities, flood control and navigation aids, utility systems (heating, sewage, water and electrical) when they serve several buildings or structures, communications systems, traffic aids, paved roads (see note regarding exceptions), bridges, non-Stewardship land easements, railroads, monuments and memorials and nonstructural improvements such as trails, sidewalks, parking areas and fences. The costs of structures and facilities include costs of acquisition and improvements. The presence of office space enclosed by walls and a roof within a structure does not change the nature of the underlying structure, e.g., Hoover Dam remains a structure even though office space is included in the dam. (Refer to Section VII. Capitalization Criteria regarding capitalizing structures and facilities.)
           
       3. Water Projects Subject to User Charges. Water projects subject to user charges consist of multi-purpose projects where construction costs are allocated among the various project purposes, e.g., irrigation water, municipal and industrial (M&I) water, hydroelectric power generation, flood control, recreation, and fish and wildlife enhancement. Some of these project purposes, e.g., irrigation water, M&I, and power are generally reimbursable; thus all costs incurred for these project purposes, commencing with initial project authorization, must be recovered from project beneficiaries.
           
       4. Heritage Assets. Heritage assets are property, plant and equipment (PP&E) thatpossess one or more of the following characteristics: 1) historical or natural significance, 2) cultural, educational or aesthetic value; or 3) significant architectural characteristics. The cost of heritage assets is not often relevant or determinable, and the useful life of heritage assets is generally not reasonably estimable for depreciation purposes. The most relevant information about heritage assets is their existence and condition. Therefore, heritage assets are reported in physical units rather than in monetary value.

          The cost of acquiring, improving, reconstructing, or renovating heritage assets, other than multi-use heritage assets, shall be recognized on the statement of net cost for the period in which the cost is incurred. The cost shall include all costs incurred during the period to bring the item to its current condition at its initial location.

          No amounts for heritage assets acquired through donation or devise (a will or clause or a will disposing of property) shall be recognized in the cost of heritage assets. The assets' fair value, if known and material, shall be disclosed in notes to the financial statements in the year received. If fair value is not known or reasonably estimable, information related to the type and quantity of heritage assets received shall be disclosed.
           

       5. Multi-Use Heritage Assets. Some assets may have both operating and heritage asset characteristics. A heritage asset that predominant use is for general government operations is referred to as a multi-use heritage asset (e.g., the Main Interior Building which is predominantly used as office space). The cost of acquisition, betterment, or reconstruction of all multi-use heritage assets shall be capitalized as general PP&E and depreciated. Heritage assets having incidental use in general government operations (e.g., a small amount of office space in an historic structure) are not referred to as "multi-use heritage assets." Rather, they are simply "heritage assets."
           
    2. Land and Land Rights. Land is the solid part of the surface of the earth. The treatment of land in financial records depends on whether it is General PP&E or Stewardship Land.
        
       1. General PP&E Land is land used in general operations, including land underlying schools, office buildings, research facilities, etc., provided that the land was not previously acquired by the Federal government as part of the public domain and is not currently used in a stewardship capacity. The cost of General PP&E land is recognized in the financial records in the year that it is acquired. Land does not appreciate or depreciate.
           
       2. Stewardship Land is any land owned by the Federal Government and not acquired for or in connection with other general PP&E. Typical stewardship land is land held for its natural or cultural significance such as park land, wildlife refuge, etc. In addition, any land which came into government ownership as public domain land remains Stewardship land regardless of how the land is used by Interior as the cost of this land is not identifiable. The overwhelming majority of Interior's land is Stewardship land. Stewardship land does not have an identifiable financial value and is not recognized in the financial statements.
           
       3. Mineral Rights, Natural Resources and the Outer Continental Shelf. Materials beneath the surface of the land (e.g., mineral deposits and petroleum), or above the surface of the land (e.g., renewable resources such as timber) and Outer Continental Shelf resources related to land are excluded from this policy. These assets are not considered to be real property within the scope of this policy document. In general, no financial value is assigned to these assets.
           
       4. Land Rights are interests and privileges held by the entity in land owned by others, such as leaseholds, easements, water and water power rights, diversion rights, rights-of-way, and other land interests in land. Land rights are treated in the same manner as associated General PP&E or Stewardship Land.
           
       5. Improvements to Land are permanent improvements to land used in operations, except for roads. Costs of improvements to land are treated in the same manner as General PP&E and Stewardship Land.
           
    3. Construction-in-Progress (CIP). Construction-in-Progress includes costs incurred in the construction of real property for which the agency will be accountable, including direct labor, direct material, overhead and other costs incurred during construction. Upon completion, these costs will be transferred to the property capital asset account as the acquisition cost of the asset.
        
       1. Assets Constructed for Other Federal Agencies are normally recognized as CIP on the books of the constructing bureau until completion. In general, upon completion, the asset is transferred to the property records of the other bureau or agency. The most common situation is where one Interior bureau constructs an asset for another Interior bureau. In this case, the asset under construction is clearly CIP of the Department and should be recognized as such. In the case of assets built for Federal agencies outside Interior, the terms of the agreement must be reviewed. If the agreement creates a situation where the asset under construction can be considered "held for sale", then it may be necessary to reclassify the asset from CIP to Inventory. Bureau and Department financial personnel must be consulted to ensure appropriate accounting recognition.
           
       2. Assets Constructed for Non-Federal Agencies, including state, local and tribal governments, are also recognized as CIP until completion. The exact nature of the accounting treatment will depend upon the details of the transaction. Upon transfer of title to the non-federal agency, the bureau will remove CIP from its records and recognize an expense for Investment in Non-Federal Physical Property.
           
       3. Construction in Abeyance is construction in progress that has been halted due to lack of funding or other reasons, and continues to be maintained (e.g., some BOR projects such as dams).
           
       4. Investigation and Development Costs are costs incurred for general engineering studies and surveys that are directly related to project construction are capitalized as part of the Construction project. Investigation and development costs incurred prior to construction authorization or otherwise not related to project currently under construction will be accumulated as Investigation and Development costs and presented as a component of CIP. Once the engineering studies and surveys are complete and structural construction begins, these costs are transferred from investigations and development to CIP. Costs related to projects not reasonably expected to be pursued must be written off. Management must review the costs accumulated in investigations and development on a regular basis to ensure proper treatment.
           

16. Appendix C -Worldwide Inventory – Real Property Profile – Annual Report, GSA Form 1166
     
    1. When and how must a bureau/office submit real property information to the Worldwide Inventory?

       Each bureau must submit real property information annually as follows:
        

       1. On your real property inventory on the last day of each fiscal year (or select a date when the records are closed for the FY).
           
       2. Within 45 days after the fiscal year ends, e-mail your bureau's real property inventory information to the General Services Administration (GSA) at assetmanagement@gsa.gov or update the Federal Real Property Profile Internet Application at http://realpropertyprofile.gov. Bureaus electing to update on the Federal Real Property Profile Internet Application should also use these instructions as guidance. (Refer to FMR PART 102-84.55)
           
    2. What types of real property must I report for the annual real property Inventory?

       You must report for the Annual Real Property Inventory all land, buildings, and other structures and facilities owned by the United States (including wholly-owned Federal Government corporations) throughout the world and all real property leased by the United States from private individuals, organizations, and municipal, county, State, and foreign governments. These reports must include all real property that a Federal agency carries on its financial statement and/or in documentation accompanying the financial statement, such as:
        

       1. Unreserved public domain lands;
       2. Public domain lands reserved for national forests, national parks, military installations, or other purposes;
       3. Real property acquired by purchase, construction, donation, eminent domain proceedings, or any other method;
       4. Real property in which the Government has a long-term interest considered by the reporting agency as being equivalent to ownership. This would include land acquired by treaty or long-term lease (e.g., 99-year lease), and that your agency considers equivalent to Federally-owned land;
       5. Buildings or other structures and facilities owned by or leased to the Government whether or not located on Government-owned land;
       6. Excess and surplus real property;
       7. Real property held in trust by the Federal Government;
       8. Leased real property (including leased land, leased buildings, leased other structures and facilities, or combination thereof); and
       9. Real property leased rent free or for a nominal rental rate if the real property is considered significant by the reporting agency.

NOTE: GSA FORM 1166 is an attachment to this Appendix.