Capital Budget Transfers in preparation for GAAP compliance.

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A decision made (24/11/2008) regarding: Capital Budget transfers in preparation for GAAP compliance.

Decision Reference: MD-TR-2008-0131
Decision Summary Title:	PROPERTY HOLDINGS CAPITAL PROJECTS - BUDGET TRANSFERS		Date of Decision Summary:	20th November 2008
Decision Summary Author:	R.Foster Assistant Director - Finance & Strategy		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	n/a
Written Report Title:	PROPERTY HOLDINGS CAPITAL PROJECTS - BUDGET TRANSFERS		Date of Written Report:	20th November 2008
Written Report Author:	R.Foster Assistant Director - Finance & Strategy		Written Report : Public or Exempt?	Public
Subject: Capital Budget Transfers in preparation for GAAP compliance
Decision(s): The Minister approved various budget transfers referred to in Table 1 of the attached report
Reason(s) for Decision: The budget transfers are required to ensure capital budgets retained by Property Holdings comply with the requirements of GAAP under the terms of the Treasury’s Financial Reporting Manual.
Resource Implications: Other than those detailed in the report there are no further financial or manpower Implications.
Action required: Treasury to action budget transfers as detailed in the report
Signature:		Position: Senator T A Le Sueur, Minister for Treasury and Resources
Date Signed: 24th November 2008		Date of Decision: 24th November 2008

Capital Budget Transfers in preparation for GAAP compliance.

TREASURY AND RESOURCES MINISTER

property holdings capital projects - budget transfers

Purpose of Report
The Minister is asked to approve a number of budget transfers in respect of Property Holdings’ capital heads of expenditure as set out in Table 1 below.

Background
The move to GAAP compliant accounting has required all departments to address outstanding issues in relation to capital works projects recorded as Assets Under the Course of Construction (AUCC).
The more refined definition under GAAP requires a number of projects to be recognised as complete and moved to the balance sheet as fixed assets rather than remaining in AUCC status.
In order to move projects to completed works status a number of budget transfers are required. These transfers would have previously occurred as the last action before transferring the whole project value to completed works, however, to comply with GAAP, capital projects are now transferred to completed works once the asset is available for use.
In addition to budget transfers relating to meeting GAAP compliance, the exercise has identified a number of other outstanding budget transfers to which approval is sought.

Comments

Proposed Transfers

Table 1

No.

Reason

Disabled Access to La Moye School

Balance of £7,050 outstanding from original £100,000 allocation. No spend since budget transferred to PH in 2006

Proposed transfer £5,579 to cover overspend on La Moye School completed project. Balance to Consolidated Fund

St Clement’s School and D’Auvergne (La Pouquelaye) to Mont A L’Abbe Phase 2

St Clement’s completed - £49,875 balance outstanding

D’Auvergne completed - £29,222 balance outstanding

Proposed transfer of £78,000 to cover projected overspend on Mont á L’Abbe Ph2. The projected overspend is due to additional works required to the swimming pool, not envisaged in the original brief.

States Building to Indoor Market Project

The States Building has been completed for some time and subsequent works to address defects have also now been finalised. The project has an unspent balance of £125,835. It is proposed that this sum be transferred to the Indoor Market project budget.

This scheme has had a chequered past, being transferred from T&TS to Property Holdings, being previously managed by the former Environment and Public Services Committee, Economic Development Committee, its predecessor Industries Committee and the former Public Services Committee.

The project comprises two distinct elements (roof and floor). There are insufficient funds to undertake both elements and Property Holdings will address the more urgent roof works as Phase 1 commencing early in 2009.

The balance of funding remaining on completion of phase 1 is estimated at £355,000 against the current estimated cost of £600,000 to undertake replacement of the floor (subject to planning approval).

The surplus generated from market rents of some £120,000 in 2010 will be used to supplement the budget for Phase 2 (in accordance with an agreement between the Market Traders and the former Industries Committee)

However in order to commence works on the floor directly following the roof works, further funding will be required. It is, therefore, proposed to transfer the unspent balance of £125,835 from the States Building project to support the Indoor Market (phase 2) works.

Arts & Heritage Trust Capital Maintenance to Revenue

This budget has been utilised principally to prevent further deterioration to St James Church and protect the public from falling masonry. The remaining budget totals £25,710 and should be classified as revenue as the works it supports do not materially add to the value or longevity of the building.

The budget sum is likely to be exhausted in 2008. Property Holdings are working with the Arts Trust and Education, Sport and Culture to seek a permanent solution for the long term use of the buildings.

Preparation for Disposal to Revenue

Budget of £250,000 held in capital, together with corresponding expenditure, to be transferred to revenue as costs are not capable of being capitalised under GAAP.

Strategic Property Reserve to Youth Service Works

Capital receipts from disposals are currently credited to the Strategic Property Reserve. Property Holdings is discussing with the Treasury an appropriate mechanism to hold disposal receipts before their application which is GAAP compliant.

In the interim, a budget transfer of £528,000 is proposed from the Strategic Property Reserve to a Capital Head of Expenditure called Youth Service Works to fund the Move On Café fit out and works to Sounds Workshop Centre. These funds represent the proceeds of sale of the former Seaton Place Youth Centre, whose application to the replacement of youth service provision was agreed by the (then) F&E and ESC Committees [Finance and Economics Committee Act B2, 26/02/2001 refers]

Town Park Balance of Budget Allocation

Transfer balance of the Town Park budget of £500,000 from Property Holdings to T&TS. The transfer is consistent with the Town Park proposals in the Capital Programme 2009 -2013 contained in the States Annual Business Plan as approved in September 2008 [P113/2008 refers].

The respective JD Edwards Business Unit and Object Account references are detailed in Appendix A.

Recommendation
That the Minister approves the budget transfers referred to in Table 1 above and detailed in Appendix A.

Reason for Decision
The budget transfers are required to ensure capital budgets retained by Property Holdings comply with the requirements of GAAP under the terms of the Treasury’s Financial Reporting Manual.

Property Holdings

20 November, 2008 for Meeting 24/11/2008

TABLE 1

No.	From/To	JDE Reference	Description	Amount £
1	From	FXA003.120410	Disabled Access	-5,579
	To	FXA015.120410	La Moye School	+5,579

2	From	FXA013.120410	St Clement School	-49,000
	From	FXA016.120410	La Pouquelaye School	-29,000
	To	FXA012.120410	Mont A L’Abbe Ph2	+78,000

3	From	FXA035.121010	States Building	-125,835
	To	FXA022.121010	Indoor Markets	+125,835

4	From	FXA006.120210	Arts & Heritage Trust Buildings	-25,710
	To	FAB011.701100	Arts Buildings Revenue	+25,710

5	From	FXA032.121010	Preparation for Disposal Capital	-250,000
	To	New B/Unit tba	Preparation for Disposal Revenue	+250,000

6	From	FXA031.121010	Strategic Property Reserve	-528,000
	To	FXA037.121170	Youth Services Works - Various	+528,000

7	From	FXA007.121010	Town Park (Property Holdings)	-306,799
	From	FXA007.120290	Town Park (Property Holdings)	-193,201
	To	QZA110.121010	Town Park (T&TS)	+500,000