This best practice criteria assesses a community’s capital assets and the policies implemented to protect, sell, or purchase capital assets. Each local unit shall have a written capital asset policy that addresses asset capitalization and retirement. A six-year plan for capital expenditures is necessary to properly budget for expenses. All capital expenditures must be approved by the local unit governing body.
Expectation
- Local units shall have a written capital asset policy that addresses asset capitalization and asset retirement/sale practices (setting a dollar threshold and perhaps a useful life threshold).
- The purchase, addition, disposal, and sale of an asset must have prior approval from the appropriate local officials (Department of Treasury, 2007).
- The local unit shall adopt a policy to inventory and assess the condition of all major capital assets.
- Capital expenditures shall be projected for at least six years.