New rules forcing governments to put values on their assets

Friday, July 23, 1999 | 12:10 p.m.

Nobody much cares. But new regulations adopted nationally may cause headaches for state and local governments that will be required to capitalize their assets much like private industry.

"I don't see any benefit to this, and it's going to be a big problem," state Controller Kathy Augustine says.

Augustine said government finance officers didn't support the new financing reporting model adopted by the Governmental Accounting Standards Board. It means governments will have to produce financial reports much like private industry, which depreciates such things as buildings and equipment.

The seven-member accounting standards board, based in Norwalk, Conn., approved the new rule last month and said it "represents the most important single change in the history of accounting and financial reporting for state and local governments."

Supporters say it will help taxpayers understand what governments are doing with their money. But local governments bombarded the standards boards with protests about the costs and time it will take to do the work.

Governments for the first time have to figure the value of nearly every major asset they own, from roads to bridges to prisons to sewers to hospitals, even if they were constructed decades ago.

Augustine's office will make a presentation Tuesday to the state Transportation Board on the new financial reporting requirements.

She has already added her name to the list of those who have complained about the new policy. In an April 6 letter to Tom Allen, chairman of the standards board, Augustine wrote, "Infrastructure reporting and depreciation would undoubtedly entail a significant investment of government resources.

"Not only is the historical cost of an infrastructure asset completely irrelevant to decision making, but the allocation of that cost to subsequent periods in the form of depreciation expense is at best irrelevant and at worst misleading," Augustine said.