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ColorofMoney_NoNotes

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  • pg 1
									             Color of Money:
         Operating Versus Capital

                                       Presented by
                                       Tim Young




FINANCIAL POLICY AND TRAINING OFFICE             OFFICE OF THE CHIEF FINANCIAL OFFICER


                                                                         CFO
                                           Objectives

          • Importance of Color of Money
          • Equipment – When to Use Operating Funds
          • Equipment – When to Use Capital Funds
          • Construction – When to use Operating
            Funds
          • Construction – When to use Capital Funds


    FINANCIAL POLICY AND TRAINING OFFICE                OFFICE OF THE CHIEF FINANCIAL OFFICER

2
                                                                                CFO
                            Capitalization Changes

          Purchased after October 1, 2005:

          • Useful life criteria New Capitalization Threshold
          •     $50K new threshold
          •     Service life remains at 2 years or more
          •     FMSIC requested the change
          •     $5K threshold for property accountability does not change
          •     For property acquired starting in FY06
          •     Equipment purchased before FY06 with a value less than
                $50K will not be written-off

    FINANCIAL POLICY AND TRAINING OFFICE               OFFICE OF THE CHIEF FINANCIAL OFFICER

3
                                                                               CFO
        Why Worry About the Color of Money?

          • Financial statements must accurately reflect asset
            balances
          • Heavily audited activity
          • Funding must be used for its intended purpose
          • DOE policies prescribe capitalization criteria
          • Accurate usage of Operating versus Capital funding
            at the beginning of a project is essential to accurately
            report financial statements to DOE, UC, and outside
            audit firms

    FINANCIAL POLICY AND TRAINING OFFICE           OFFICE OF THE CHIEF FINANCIAL OFFICER

4
                                                                           CFO
                       Hierarchy of Accounting Rules

    • Contract 31
    • DOE Accounting Handbook
    • Federal Financial Accounting Standards
      (FFAS)
    • Financial Accounting Standard Board
            – Generally Accepted Accounting Principles (GAAP)




    FINANCIAL POLICY AND TRAINING OFFICE        OFFICE OF THE CHIEF FINANCIAL OFFICER

5
                                                                        CFO
                                           Color of Money




                                                 1 >50k$ & Service Life >2 years
                                                 2 <50k$ & Service Life <2 years


    FINANCIAL POLICY AND TRAINING OFFICE                                           OFFICE OF THE CHIEF FINANCIAL OFFICER

6
                                                                                                           CFO
                                           Construction

          Operating Funds:

          • Repair – restoration of a deteriorated facility
          • Maintenance – day-to-day work to maintain and
            preserve the facility
          • Alteration – adjustments to the interior
            arrangements of a facility
          • Experimental and Demonstration (ED) – unique
            prototype facility constructed to demonstrate the
            feasibility of a particular process
          • Operating Lease
    FINANCIAL POLICY AND TRAINING OFFICE                  OFFICE OF THE CHIEF FINANCIAL OFFICER

7
                                                                                  CFO
                                           Construction
          Capital Funds:

          • Betterments – improvements that result in better
            quality, higher capacity, or extended useful life
          • Construction – new plant facility; improvement to
            existing facility
          • Conversion – major structural revision that
            changes functional purpose
          • Install or assemble a new utility system
          • Capital Lease
    FINANCIAL POLICY AND TRAINING OFFICE                  OFFICE OF THE CHIEF FINANCIAL OFFICER

8
                                                                                  CFO
                               Equipment/Fabrication

         Operating Funds:

         • Cost less than $50K
         • Service life less than 2 years
         • Prototype, inherently experimental, or
           expected to be consumed within 2 years
         • Like-for-like replacement (essentially same
           performance capabilities)
    FINANCIAL POLICY AND TRAINING OFFICE        OFFICE OF THE CHIEF FINANCIAL OFFICER

9
                                                                        CFO
                                Equipment/Fabrication

           • Capital Funds:
                   – Equipment that has a service life of two or more
                     years, and costs $50K or above (invoice price,
                     transportation charges, modification and
                     installation costs)
           • Fabrication of equipment to accomplish a
             special purpose in the performance of a
             project
           • Betterments to an existing unit

     FINANCIAL POLICY AND TRAINING OFFICE              OFFICE OF THE CHIEF FINANCIAL OFFICER

10
                                                                               CFO
                           Color of Money Committee

     • Purposes:
             – Examine proposals for GPP, GPE and Non-Cap $
             – Ad hoc issues
     • Committee Members
             – Facilities - Rich McClure and Emmy Randol
             – OCFO – Anne Moore, Michelle Blaha, Sonya Neely
               and Tim Young




     FINANCIAL POLICY AND TRAINING OFFICE      OFFICE OF THE CHIEF FINANCIAL OFFICER

11
                                                                       CFO
                                            Current Process


     • Requests for GPP, GPE and Non-Cap –
       Annual Call
     • Process:
             – Divisions submit a proposal to Rich McClure, Facilities
               Planning
             – Proposals are reviewed by the Color of Money
               Committee
             – Proposals initially accepted are compiled and sent to
               senior management for prioritization and funding

     FINANCIAL POLICY AND TRAINING OFFICE                     OFFICE OF THE CHIEF FINANCIAL OFFICER

12
                                                                                      CFO

								
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