Transcript
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CWIP Theory &
Accounting
Presented by
NOAA Financial Statements Branch
June 23, 2006
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CWIP Theory & Accounting
• CWIP is a financial holding account:
– Of resources applied to a construction project.
– Allows them to be recognized as an asset without triggeringdepreciation.
– A generally accepted accounting principle required of allFederal Agencies
– Reflects the fair market value at point “X” in the CWIPgestation timeline.
– Reported on NOAA’s and DOC’s Quarterly and Year End
Financial Statements.
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CWIP Theory & Accounting
• Costs:
– The classification assigned to the resources that will be included inthe final value of the depreciable item constructed.
– Represents the resources that meet the criteria of an asset (to bereported on the Balance Sheet.)
– Are identified only with goods received or delivered, and or services performed.
• If you haven’t got it… it’s not a cost.
– Received or Delivered Trumps:» Ordered» Payable» Committed» In transit/enroute/partial performance, and
» Paid
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CWIP Theory & Accounting
• Expenses:
– All other CWIP Resources used that won’tbe part of the final depreciable value.
– Reported on NOAA’s Income Statement
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CWIP Theory & Accounting
• Whether you know it or not:
– every classification of each cwip resource,
as either an asset or an expense, helpsbuild NOAA’s Balance Sheet & Income
Statement.
• Which goes where?
– depends on the project codes you assign
to that resource.
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CWIP Theory & Accounting
• CWIP tracking:
– Is NOT a Budget Execution Exercise.
– Delegates CWIP activity managers to sort theresources to be recorded as:
• Assets (on the balance sheet)• Expenses (on the income statement)
– Accomplished through dedicated project codes,namely:
• Income Statement project codes• Balance Sheet project codes
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CWIP Theory & Accounting
• Conclusion:
– CWIP activity manager financial reporting• Is NOT a recap of Budget Execution
responsibilities.
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CWIP Theory & Accounting
• KPMG, NOAA’s Contract Independent Auditors, Audit CWIP:
– Not from a Budget Execution Standpoint
– Instead, from a Financial Statement creation perspective.
• Their prime objective:
– Are you assigning the right CWIP project codes.» To all CWIP resources going into your construction activity?
» Asset project codes for items to be depreciated.
» Expense project codes for every thing else.
» Exclusion of Undelivered Orders
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CWIP Theory & Accounting
• What’s Driving This Preoccupation
– Materiality Concerns• CWIP is:
– 50% of NOAA’s Total PP&E – The lynch pin in assessing the complete & reliability of NOAA’s
Balance Sheet
• NOAA’s Financial Statements fail annual audit: » If CWIP Balances are not fairly stated as assets that reflect
goods and services received or delivered
• DOC’s Financial Statements fail their audit: – NOAA comprises over 50% of DOC’s assets.
• As of 2006 NOAA has $3 billion in CWIP assets.
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CWIP Theory &
Accounting
Questions
or
Clarifications
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ASC’s) offices on financial management policies andproced res and pro ides special p rpose financial
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)
FinancialReporting DivisionFinancial Policyand Compliance
DivisionAdministrativeSupport GroupSite MapQuick Links
AuditCBS(FSD)
CWIPFed ExFinance
HandbookInternal
ControlsMotorpool
Object
Class PolicyPurchas
e Cards
procedures and provides special-purpose financialinformation and analyses on matters of immediateconcern to line/staff offices, the CFO, and theOffice of the Under Secretary.
Jon Alexander Director, Finance Office/Comptroller Phone: (301) 444-2102 Staff Directory
Services DivisionINTERNET EXPLORER
<ACWIP Reconciliation Template
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(former FinanceASC’s)
FinancialReporting Division
Financial Policy &ComplianceDivisionAdministrativeSupport Group
Site MapQuick Links
AuditCBS
(FSD)
CWIPFedEx
FormsInternal
Controls
MotorpoolObjectClass
Policy
CWIP Instructions for completing CWIP
Reconciliation Spreadsheet NEW CWIP Policies (Use computer login and passcode)
Activity Manager's Reconciliation CHECKLIST NEW
Line Office/M&B Chief Reconciliation
CHECKLIST NEW
<ACWIP Reconciliation Template•Excel Version•Lotus Version
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