A budget for the District shall be prepared annually for the Board's review. The budget will include the following:

· the amount of revenues to be raised by taxation;

· the amount of revenues from sources other than taxation;

· an itemization of the amount to be spent in each fund; and,

· a comparison of the amount spent and revenue received in each fund for like purposes in   the two prior fiscal years.

It is the responsibility of the superintendent and the Board secretary and/or treasurer to prepare the budget for review by the Board prior to the April 15 deadline each year.

Prior to the adoption of the proposed budget by the Board, the public shall be apprised of the proposed budget for the school district. Prior to the adoption of the proposed budget by the Board, members of the District community will have an opportunity to review and comment on the proposed budget. A public hearing for the proposed budget of the Board shall be held each year in sufficient time to file the adopted budget no later than April 15.

The time and place for the public hearing on the proposed budget is published in a newspaper designated for official publication in the District. It is the responsibility of the Board secretary and/or treasurer to publish the proposed budget and public hearing information at least 10 but no more than 20 days prior to the public hearing.

Prior to certification of the budget, the Board will review the projected revenues and expenditures for the District and make adjustments where necessary to carry out the education program within the revenues projected.

The Board will adopt and certify a budget for the operation of the District to the county auditor by April 15. It is the responsibility of the Board secretary and/or treasurer to file the adopted and certified budget with the county auditor and other proper authorities.

The Board may amend the budget for the fiscal year in the event of unforeseen circumstances. The amendment procedures will follow the procedures for public review and adoption of the original budget by the board outlined in these policies.

It is the responsibility of the superintendent and the Board secretary and/or treasurer to bring any budget amendments necessary to the attention of the Board as soon as possible in order to allow sufficient time to file the amendment with the county auditor.

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The budget of the District is the authority for the expenditures of the District for the fiscal year for which the budget was adopted and certified. It is the responsibility of the superintendent to manage the operations of the District within the budget.

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When the necessity for a fund has ceased to exist, the balance may be transferred to another fund or account by Board resolution. District monies received without a designated purpose may be transferred in this manner. District monies received for a specific purpose or upon public vote may only be transferred by Board resolution when the purpose for which the monies were received has been completed. Voter approval is required to transfer monies to the general fund from the capital projects fund and the debt service fund.

It is the responsibility of the Board secretary and/or treasurer and/or the superintendent to make recommendations to the Board regarding transfers and to provide the documentation justifying the transfer.

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District funds in excess of current needs are invested in compliance with this policy. The goals of the District's investment portfolio in order of priority are:

· To provide safety of the principal funds;

· To maintain the necessary liquidity to match expected liabilities; and

· To obtain a reasonable rate of return.

In making investments, the District will exercise the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use to meet the goals of the investment program.

District funds are monies of the District, including operating funds. "Operating funds" of the District are funds which are reasonably expected to be used during a current budget year or within fifteen (15) months of receipt. When investing operating funds, the investments must mature within three hundred and ninety-seven (397) days or less. When investing funds other than operating funds, the investments must mature according to the need for the funds.

The Board authorizes the Board treasurer to invest funds in excess of current needs in the following investments.

· Interest bearing savings, money market, and checking accounts at the District's    authorized depositories;

· Certificates of deposit at the District’s authorized depositories;

· Qualified investment pool;

· Obligations of the United States government, its agencies and instrumentalities; and

· Certificates of deposit and other evidences of deposit at federally insured Iowa depository institutions.

It is the responsibility of the Board treasurer to oversee the investment portfolio in compliance with this policy and the law.

If the Board requests it, it shall be the responsibility of the Board treasurer to bring a contract with an outside person to invest District funds, to advise on investments, to direct investments, to act in a fiduciary capacity or to perform other investment services to the Board for review and approval. The Board treasurer shall also provide the Board with information about and verification of the outside person's fiduciary bond. Contracts with outside persons shall include a clause requiring the outside person to notify the District within thirty (30) days of any material weakness in internal structure or regulatory orders or sanctions against the outside person regarding the services being provided to the District and to provide the documents necessary for the performance of the investment portion of the District audit. The compensation of the outside persons shall not be based upon the performance of the investment portfolio.

It is the responsibility of the Board treasurer to report to and review the investment portfolio's performance, transaction activity and current investments including the percent of the investment portfolio by type of investment and by issuer and maturities with the Board at its regular meetings. The report shall also include trend lines by month over the last year and year-to-year trend lines regarding the performance of the investment portfolio. It shall also be the responsibility of the treasurer to obtain the information necessary to ensure that the investments and the outside persons doing business with the District meet the requirements outlined in this policy.

It is the responsibility of the superintendent to deliver a copy of this policy to the District's depositories, auditor and/or other outside persons doing investment business with the school district.

It will also be the responsibility of the Superintendent, in conjunction with the Board treasurer, to develop a system of investment practices and internal controls over the investment practices. The investment practices are designed to prevent losses, to document the officers' and employees' responsibility for elements of the investment process and address the capability of the management.

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General

The board strives to maintain adequate fund balances and reserves in order to:

1.         Provide sufficient cash flow for daily financial needs;

2.         Secure and maintain investment-grade bond ratings;

3.         Offset significant economic downturns or revenue shortfalls; and

4.         Provide funds for unforeseen expenditures related to emergencies.

Reporting Fund Balances

The board shall engage in accounting and financial reporting procedures in compliance with the Governmental Accounting Standards Board’s Statement No. 54 (“GASB 54”).

Pursuant to GASB 54, governmental fund balances shall be identified for purposes of reporting as one of the following types of funds:

Governmental fund balances shall first be distinguished based upon whether the fund balance is nonspendable, as defined above, and then shall be distinguished based upon whether the fund balance is restricted, classified, assigned or unassigned, all as defined above.

Governmental fund balances shall be identified at the highest category of identification possible, regardless of whether the fund balance also fits into a lower category of identification (i.e., a PPEL fund balance should be reported as “restricted,” even if a separate Board action “committed” a portion of the PPEL fund balance to a specific purpose).

Authority to Commit or Assign Fund Balances

The Board shall have the authority to determine whether a governmental fund balance in the District’s general fund is committed and/or assigned, both as defined above. The Board shall take formal board action prior to committing a fund balance. The Board shall approve by a majority vote the commitment of a fund balance, and shall approve by a two-thirds vote the removal of the commitment of a fund balance. The Board delegates to the superintendent the authority to assign a fund balance in the District’s general fund to be used for a specific purpose.

Spending Fund Balances

Pursuant to GASB 54, the District shall spend and/or reduce governmental fund balances in the following order: restricted fund balance, committed fund balance, assigned fund balance and unassigned fund balance.

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Revenues of the District shall be received by the Board treasurer. Other persons receiving revenues on behalf of the District will promptly turn them over to the Board treasurer.

Revenue, from whatever source, is accounted for and classified under the official accounting system of the District. It is the responsibility of the Board treasurer to deposit the revenues received by the District in a timely manner. District funds from any and all sources will not be used for private gain or political purposes.

Tuition fees received by the District shall be deposited in the general fund. Tuition fees for summer school, driver's education, and adult education, as applicable, are set by the Board prior to the offering of the programs.

The Board may charge materials fees for the use or purchase of educational materials. Materials fees received by the District shall be deposited in the general fund. It is the responsibility of the Superintendent to recommend to the Board when materials fees will be charged and the amount of the materials fees.

Rental fees received by the District for the rental of District equipment or facilities shall be deposited in the general fund.

Proceeds from the sale of real property shall be placed in the physical plant and equipment levy (PPEL) fund, except as otherwise appropriate. The proceeds from the sale of other District property are placed in the general fund, except as otherwise appropriate.

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Approved: 11/14/67                          Reviewed:                           Revised: 5/14/12; 7/8/13; 3/11/19

The Board may conduct an election for the authority to issue bonded indebtedness. Revenues generated from an approved bond issue are used only for the purpose stated on the ballot. Revenues received from the issuing of bonded indebtedness are deposited into the capital projects fund.

Once the purpose on the ballot is completed, any balance remaining in a capital projects fund may be retained for future capital projects in accordance with the purpose stated on the ballot or any remaining balance may be transferred by Board resolution to the debt service fund or the physical plant and equipment levy fund. Voter approval is required to transfer monies to the general fund from the capital projects fund.

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Approved: 11/14/67                      Reviewed: 3/11/19                      Revised: 5/14/12; 7/8/13

The Board believes gifts, grants, and bequests to the District may be accepted when they will further the interests of the District. The Board shall have sole authority to determine whether the gift furthers the interests of the District.

Gifts, grants, and bequests shall be approved by the Board. Once it has been approved by the Board, a Board member or the Superintendent may accept the gift on behalf of the District.

Gifts, grants, and bequests once accepted on behalf of the District become the property of the District. Gifts, grants, and bequests are administered in accordance with terms, if any, agreed to by the Board.

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Each year at its June regular meeting or at its annual meeting, the Board will designate by resolution the name and location of an Iowa located financial depository institution or institutions to serve as the official school district depository or depositories. The maximum deposit amount to be kept in the depository will be stated in the resolution. The amount stated in the resolution must be for all depositories and include all of the District's funds.

It is the responsibility of the Board secretary to include the resolution in the minutes of the meeting.

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Revenue raised by students or from student activities shall be deposited and accounted for in the student activities fund. Revenue raised by students or from student activities is the property of and shall be under the financial control of the Board. Students may use this revenue for purposes approved by the superintendent.

Whether such revenue is collected from student contributions, club dues or special activities or result from admissions to special events or from other fund-raising activities, all funds will be under the jurisdiction of the Board and under the specific control of the superintendent. The funds will be deposited in a designated depository and will be disbursed and accounted for in accordance with instructions issued by the superintendent.

It shall be the responsibility of the superintendent and/or the Board treasurer to keep student activity accounts up-to-date and complete.

Any unencumbered class or activity account balances will automatically revert to the activity fund when a class graduates or an activity is discontinued.

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The Board authorizes the issuance of warrants for payment of claims against the District for goods and services. The Board will allow the warrants after the goods and services have been received and accepted in compliance with Board policy.

Claims for payment of freight, athletic officials, express, postage, printing, water, lights, telephone, rents, and payment of salaries pursuant to the terms of a written contract may be paid by the Board secretary and/or treasurer prior to formal audit and approval by the Board. In addition, the secretary, upon approval of the Superintendent or his designee, may issue warrants for approved registrations, claims offering a discount for early payment, approved travel expenses, approved goods and services delivered C.O.D., and other verified bills filed with the secretary when the Board is not in session prior to payment of these claims and prior to audit and approval by the Board. The Board secretary and/or treasurer shall examine the claims and verify bills.

The secretary will determine to the secretary's satisfaction that the claims presented to the Board are in order and are legitimate expenses of the District. It is the responsibility of the secretary to bring claims to the board.!Thereafter, paid claims shall be entered on record in the regular minutes of the secretary.

The Board president and Board secretary and/or treasurer may sign warrants by use of a signature plate or rubber stamp. If the Board president is unavailable to personally sign warrants, the vice president may sign warrants on behalf of the president.

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Approved: 11/14/67                      Reviewed:  3/11/19                   Revised: 5/14/12; 7/8/13; 11/18/19

The Board shall only in the case of absolute necessity issue warrants for which there are no funds available for the payment of such warrants. If warrants are issued for which there are no funds available for payment of such warrants, the Treasurer shall institute such procedures as provided by State law.

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The Board acknowledges that expenditures and use of District resources may be needed to support the decision-making process in conducting district business, promote more efficient time frames for conducting business, promulgate a productive working climate, improve personnel well-being and morale, and nurture a positive learning environment. To serve these purposes, the Board supports appropriate expenditures and use of District resources for attainment of the District mission and strategic goals for official District activities and business.

The superintendent or designee may approve payment for the following expenditures:

Expenditures for food items and refreshments:

▪ For district staff for meetings held before normal start times, during the lunch hour, and after normal work times and any time during the day when food and refreshments are served.

▪ For district staff meeting with outside organizations and associations.

▪ For Board members and staff during Board meetings or work sessions.

▪ For Board committees or superintendent committees during meetings.

▪ For recognizing the services of employees, retirees, volunteers or donors.

▪ For staff for recognizing and promoting wellness programs participation and initiatives.

▪ For students to reinforce curriculum goals.

▪ For officials during tournaments.

Expenditures for recognition items:

▪ Given to employees, retirees, or volunteers in recognition of service.

▪ Given to staff to recognize and promote wellness programs participation and initiatives.

▪ Given to students to reinforce curriculum goals.

▪ Given to board members to recognize service.

▪ Given to students as part of an initiative, program, or recognition (i.e. honor roll).

Expenditures for miscellaneous items including:

▪ Donations with the primary objective to further a public purpose even if an incidental private end is advanced.

▪ Refreshments in public areas. In some instances, a building, or part of a building is routinely open to the public for conducting District business. The Superintendent’s Office and school principals’ offices are such locations. Having refreshments of nominal value available to members of the public, such as coffee and other nominal snacks/beverages, are considered a courtesy and are authorized in these specific locations.

▪ Flowers. The use of public funds for the purchase of flowers is restricted to the few occasions where public expression of sympathy or congratulations has been determined by the school board or the superintendent to be in the best interests of the District.

The superintendent or designee may not approve payment for the following expenditures:

▪ Sales tax. The Spirit Lake Community School District is tax exempt. All items purchased by a public school for the school’s own use, qualify for an exemption from sales tax if the items purchased relate to the educational process. The school district will not reimburse for sales tax paid for purchases made on behalf of the school district.

▪ Alcohol. The purchase of alcohol is never an acceptable use of public funds.

▪ Coffee and other beverages. These are normally a personal expense. A voluntary collection can be made from those who would like these items, and/or may be paid from an activity account that gets its source of revenue from employees.

▪ Employee break room supplies such as plastic ware and paper products. A voluntary collection can be made from those who would like these items, and/or may be paid from an activity account that gets its source of revenue from employees.

▪ Individual receptions including retirement dinners, staff meals, welcome aboard receptions, and similar gatherings.

▪ Employee gifts or gift cards for such events as birthdays or special occasions.

▪ Office holiday decorations, holiday cards, or staff holiday parties.

The superintendent is responsible for administrative regulations that define implementation of this policy.

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The board expects all board members, employees, volunteers, consultants, vendors, contractors, students and other parties maintaining any relationship with the school district to act with integrity, due diligence, and in accordance with all laws in their duties involving the school district’s resources.  The board is entrusted with public dollars and no one connected with the school district should do anything to erode that trust.

Internal controls are used to help ensure the integrity of district financial and accounting information. Adherence to district-established internal control procedures is the responsibility of all employees of the school district. The superintendent, business manager and board secretary shall be responsible for developing internal controls designed to prevent and detect fraud, financial impropriety, or fiscal irregularities within the school district subject to review and approval by the board.  Administrators shall be alert for any indication of fraud, financial impropriety, or irregularity within the administrator’s area of responsibility.

Any employee who suspects fraud, impropriety, or irregularity shall report their suspicions immediately to his/her immediate supervisor and the superintendent. The superintendent or the board president shall have primary responsibility for any necessary investigations and shall coordinate investigative efforts with the board’s legal counsel, auditing firm, the Auditor of State's office and other internal or external departments and agencies, including law enforcement officials, as the superintendent or the board president may deem appropriate. 

Employees bringing forth a legitimate concern about a potential impropriety will not be retaliated against and those who do retaliate against such an employee will be subject to disciplinary action up to, and including, discharge. 

In the event the concern or complaint involves the superintendent, the concern shall be brought to the attention of the board president or vice-president, who shall be empowered to contact the board’s legal counsel, Auditor of State's office, insurance agent, auditing firm, and any other agency to investigate the concern or complaint.

The superintendent or board president shall ensure the Auditor of State’s office is notified as required by law of any suspected embezzlement, theft or other financial irregularity pursuant to Iowa law.  The superintendent and/or board president in coordination with the Auditor of State’s office, will determine whether to conduct a complete or partial audit.  The superintendent is authorized to order a complete forensic audit if, in the superintendent’s judgment, such an audit would be useful and beneficial to the school district.  In the event there is an investigation, records will be maintained for use in the investigation.  Individuals found to have altered or destroyed records will be subject to disciplinary action, up to and including termination. 

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Approved:  12/11/23                                          Reviewed:                                     Revised:

The Board secretary and/or treasurer shall report to the Board each month the receipts, disbursements, and balances of the various funds. This report shall be in written form and sent to the Board with the agenda for the Board meeting.

Each month the schedule of bills allowed by the Board is published in a newspaper designated as a newspaper for official publication. Annually, the total salaries paid to employees regularly employed by the District will also be published in a newspaper designated as a newspaper for official publication.

The Board shall cause to have published the proceedings of each regular or special meeting after the adjournment of such meetings. The secretary shall furnish a copy of the proceedings within two (2) weeks following the adjournment of the meeting.

It is the responsibility of the Board secretary and/or treasurer to publish these reports in a timely manner.

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To review the funds and accounts of the District, the Board shall employ an auditor to perform an annual audit of the financial affairs of the District. The Superintendent shall use a request for proposal procedure in selecting an auditor. The administration will cooperate with the auditors. Such annual audit reports shall remain on permanent file in the central office of the District.

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School district records are housed in the central administration office of the District. It is the responsibility of the superintendent and board secretary to oversee the maintenance and accuracy of the records. The following records are kept and preserved according to the schedule below:

In the event that any federal or state agency requires a record be retained for a period longer than that listed above for audit purposes or otherwise, the record shall be retained beyond the listed period as long as is required for the resolution of the issue by the federal or state agency.

Employees' records shall be housed in the central administration office of the school district. Employee records shall be maintained by the superintendent, the building administrator, the employee's immediate supervisor, and the Board secretary.

An inventory of the furniture, equipment, and other non-consumable items other than real property of the school district shall be conducted periodically under the supervision of the superintendent. This report shall be filed with the Board secretary. 

The permanent and cumulative records of students currently enrolled in the District shall be housed in the administration office of the attendance center where the student attends. Permanent records must be housed in a fireproof vault. The building administrator shall be responsible for keeping these records current. Records of students who have graduated or are no longer enrolled in the school district shall be housed in the High School administration office. These records will be maintained by the high school principal. Special education records shall be maintained in accordance with the law.

The superintendent may digitize or otherwise electronically store and/or back-up or use any other reliable mass storage method to preserve school district records and may destroy paper copies of the records if they are more than three years old. An electronic record which accurately reflects the information set forth in the paper record after it was first generated in its final form as an electronic record, and which remains accessible for later reference meets the same legal requirements for retention as the original paper record.

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Financial records of the District shall be maintained in accordance with generally accepted accounting principles (GAAP) as required or modified by law. District monies shall be received and expended from the appropriate fund and/or account. The funds and accounts of the District may include, but will not be limited to, the following:

Governmental fund type:

• General fund

• Special revenue fund

• Management levy fund

• Public education and recreation levy fund

• Student activity fund

• Capital projects fund

• Physical plant and equipment levy fund

• Debt service fund

• State penny sales tax fund

Proprietary fund type:

• Enterprise fund

• School nutrition fund

• Child care fund

• Internal service fund

Fiduciary funds:

• Trust or agency funds

• Expendable trust funds

• Nonexpendable trust funds

• Agency funds

• Pension trust funds

Account groups:

• General fixed assets account group

• General long-term debt account group

As necessary the Board may, by Board resolution, create additional funds within the governmental, proprietary and fiduciary fund types. The resolution shall state the type of fund, name of the fund, and purpose of the fund.

The general fund is used primarily for the education program. Special revenue funds are used to account for monies restricted to a specific use by law. Proprietary funds account for operations of the school district operated similarly to private business, and they account for the costs of providing goods and services provided by one department to other departments on a cost reimbursement basis. Fiduciary funds are used to account for monies or assets held by the District on behalf of, or in trust for, another entity. The account groups are the accounting records for fixed assets and long-term debt.

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Electronic or digital signatures can take many forms can be created using many different types of technology. The authenticity and reliability of electronic signatures relating to transactions are dependent on the accompanying processes, supplemental records, and the overall context in which records are created, transferred, and signed. The Spirit Lake Community School District (SLCSD) adopts the following policy with respect to the use of electronic records and signatures.

Applicability:

This policy applies to parents/guardians of students in the District. It also applies to individuals affiliated with the District including, but not limited to teachers, administrators, staff, students, and volunteers.

Electronic Signatures:

An electronic signature may be used if the law requires a signature unless there is a specific statute, regulation, or policy that requires records to be signed in a non-electronic form. The issuance and/or acceptance of an electronic signature by the District may be permitted in accordance with the provisions of this policy and all applicable state and federal law. If permitted, such electronic signature shall have the full force and effect of a manual signature only if the electronic signature satisfies all of the following requirements:

1. The electronic signature identifies the individual signing the document by his/her name;
2. The identity of the individual signing with an electronic signature is capable of being validated through the use of an audit trail;
3. The electronic signature and the document to which it is affixed cannot be altered once the electronic signature has been affixed;
4. The electronic signature conforms to all other provisions of this policy.

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To improve the District's oversight of capital assets by assigning and recording them to specific facilities and programs and to provide for proof of loss of assets for insurance purposes, the District will establish and maintain a capital assets management system for reporting capitalized assets owned or under the jurisdiction of the school district in its financial reports in accordance with generally accepted accounting principles (GAAP) as required or modified by law.

Capital assets, including tangible and intangible assets, are reported in the government-wide financial statements (i.e., governmental activities and business type activities) and the proprietary fund financial statements. Capital assets reported include school district buildings and sites, construction in progress, improvements other than buildings and sites, land and machinery and equipment. Capital assets reported in the financial reports will include individual capital assets with an historical cost equal to or greater than $2,500 and as otherwise required by law. Additionally, capital assets are depreciated over the useful life of each capital asset.

The capital assets management system is updated annually to account for the addition, acquisition, disposal, relocation, transfers of capital assets. It is the responsibility of the superintendent to count and reconcile the capital assets listing for the general fixed assets account group and for each proprietary and fiduciary fund with the capital assets management system on June 30 each year.

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I. Definition of Intangible Assets

A. Intangible Assets

Intangible assets are assets that are:

(1) Identifiable – Either the assets:

(a) Can be separated or divided from the District and sold, transferred, licensed, rented or exchanged; or (b) Arose from some legal right (i.e., a contractual right), regardless of whether those rights are separable or dividable;

(2) Lacking physical substance;

(3) Non-financial in nature – The assets are not in a monetary form, such as cash or investment securities; and (4) Possessing a useful life that extends beyond a single financial reporting period.

Examples of intangible assets include the following:

(1) Easements or land use rights (i.e., water rights, timber rights and mineral rights);

(2) Patents, trademarks and copyrights; and (3) Computer software or websites that are purchased, licensed or internally generated.

Examples of assets that are not intangible assets for purposes of this Policy include only the following:

(1) Assets acquired or created primarily for purposes of obtaining income or profit, as these are considered investment assets; (2) Assets from capital lease transactions reported by lessees, except licensing agreements to lease commercially available computer software; and (3) Goodwill established or created between the District and another entity.

B. Outlays Associated with Internally Generated Intangible Assets

Intangible assets that are generated or created internally likely have outlay expenses associated with the generation or creation. Intangible assets are considered to be generated or created internally if they are:

(1) Created by the District; (2) Created by a third-party contracted by the District; or (3) Acquired by the District from a third-party and require more than minimal incremental effort on the part of the District to begin to achieve the expected level of service capacity.

C. Outlays Associated with Internally Generated Computer Software

Computer software that is generated or created internally likely has outlay expenses associated with the generation or creation. Computer software is considered to be generated or created internally if it is:

(1) Developed by the District;

(2) Developed by a third-party contracted by the District; or

(3) Commercially available software acquired, purchased or licensed by the District from a third-party that is modified using more than minimal incremental effort before being put into operation.

II. Measuring of Intangible Assets

A. Threshold for Capitalization of Intangible Assets

The District shall adopt an intangible asset capitalization threshold policy to govern the amount at and above which intangible assets must be reported in the District’s annual reporting statements and audits. More specifically, the policy shall provide a threshold to be applied to individual intangible assets and shall prohibit the aggregation of items, including intangible assets and outlays, to meet the threshold. The policy shall be approved by the Board prior to its adoption.

B. Recognition of Intangible Assets

The District shall record individual intangible assets exceeding the threshold amount outlined in the District’s intangible asset capitalization threshold policy as follows:

(1) Intangible assets received in an exchange transaction or purchased shall be recorded at actual historical cost, which includes direct costs, and excludes indirect costs;

(2) Intangible assets in the form of business activities and enterprise funds received in an exchange transaction or purchased shall be recorded at actual historical cost, which includes direct costs, specifically capitalized interest and ancillary charges, and excludes indirect costs; and

(3) Intangible assets received in a non-exchange transaction or donated shall be recorded at estimated fair market value at the time of acquisition, which requires implementation of a rational method to determine or estimate the value at which the asset could be exchanged between willing parties not involved in a forced sale.

(4) Intangible assets reported retroactively shall be recorded at actual historical cost, regardless of whether the asset is fully amortized prior to June 30, 2009. If an intangible asset reported retroactively is fully amortized prior to June 30, 2009, the District shall record the value of the intangible asset separately from the value of the amortization.

III. Accounting for Intangible Assets

A. Intangible Assets

Intangible assets exceeding the threshold shall be accounted for as capital assets. Therefore, all financial requirements concerning capital assets, including, but not limited to, all accounting and reporting requirements, such as those associated with recognition, measurement, presentation and disclosure, shall be followed.

B. Outlays Associated with Internally Generated Intangible Assets

Outlays from internally generated intangible assets exceeding the threshold shall not be accounted for as capital assets until they are identifiable and the “specified conditions criteria” have occurred (see below). Outlays exceeding the threshold not meeting these requirements and/or incurred prior to these criteria occurring shall be accounted for as an expense when the expense is incurred.

Outlays from internally generated intangible assets exceeding the threshold shall be accounted for as capital assets if they occur after such time as:

(1) The assets are identifiable – See the definition outlined in Section I of this Policy; and

(2) The “specified conditions criteria” have occurred, as follows:

(a) Determination of the specific objective of the project and the nature of the service capacity that is expected to be provided by the intangible asset upon completion of the project;

(b) Demonstration of the technical or technological feasibility for completing the project so that the intangible asset will provide its expected service capacity; and (c) Demonstration of the current intention, ability, and presence of effort to complete or, in the case of a multiyear project, continue development of the intangible asset.

C. Outlays Associated with Internally Generated Computer Software Outlays from internally generated computer software developed by the District or by a third- party contracted by the District exceeding the threshold shall be accounted for as follows:

(1) During the preliminary project stage, all outlays exceeding the threshold shall be accounted for as an expense when the expense is incurred. The preliminary project stage involves the conceptual formulation and evaluation of alternatives, the determination of the existence of needed technology and the final selection of alternatives for development of the software. (2) During the application development stage, outlays that occur before the specified conditions criteria have occurred and exceed the threshold shall be accounted for as an expense when the expense is incurred; outlays that occur after the specified conditions criteria have occurred and exceed the threshold shall be accounted for as capital assets; and outlays that occur after the computer software is substantially complete and operational and exceed the threshold shall be accounted for as an expense when the expense is incurred. The application development stage involves the design of the chosen path, including, but not limited to the purchase of the software or license; the software configuration and the software interfaces; the coding; the installation to hardware; the testing; any minor modifications made to the software before it is placed into operation; and the data conversion, if such was deemed necessary in order to make the software operational. (3) During the post-implementation and operation stage, all outlays exceeding the threshold shall be accounted for as an expense when the expense is incurred. The post-implementation and operation stage includes the data conversion, if such was not deemed necessary during the application development stage in order to make the software operational; the application training; and the software maintenance.

Outlays from internally generated computer software extensively modified by the District or by a third-party contracted by the District exceeding the threshold shall be accounted for as follows:

(1) All outlays from the modification of computer software exceeding the threshold shall be accounted for as capital assets if the one of the following conditions exist:

(a) The modification causes an increase in the functionality of the software (the software is able to perform tasks that it was previously incapable of performing);

(b) The modification causes an increase in the efficiency of the software (the software offers an increased level of service without the need for an increased performance of tasks); or

(c) The modification extends the estimated useful life of the software. (2) All outlays from the modification of computer software exceeding the threshold shall be accounted for as an expense when the expense is incurred if none of the above conditions exists.

IV. Amortization of Intangible Assets

In amortizing an intangible asset that is capitalized because it exceeds the threshold and meets the requirements above, the following general rules shall apply:

(1) The useful life of an intangible asset generally shall be estimated. Therefore, the intangible asset has a determinable useful life, even if it must be estimated, and shall be amortized using the straight-line method. (2) The useful life of an intangible asset that arises from and is limited by contractual or other legal rights shall not exceed the period of the intangible asset’s service capacity provided under the contract or other legal provision. Therefore, the intangible asset has a determinable useful life, even if it must be estimated, and shall be amortized using the straight-line method. (3) The useful life of an intangible asset that is not limited by any legal, contractual, regulatory, technological or other factors shall be indefinite. Therefore, the intangible asset has no determinable useful life and shall not be amortized.

In considering changes in circumstances that affect the amortization of an intangible asset, the following rules shall apply:

(1) An intangible asset that arises from and is limited by contractual or other legal rights shall take into consideration contract renewal periods for purposes of determining its useful life and its amortization schedule only if the following requirements are met:

(a) There is evidence that the District will seek and be able to achieve contract renewal; and

(b) The anticipated outlay for contract renewal is nominal in relation to the level of service capacity obtained by the contract renewal.

(2) An intangible asset that was once not limited by any legal, contractual, regulatory, technological or other factors, but now is limited by such factors due to changes in conditions, shall be tested for impairment because the expected duration of the useful life of the asset has changed, and then the following rules shall apply:

(a) If an impairment is determined not to exist, the intangible asset has a determinable useful life and shall be amortized using the straight-line method.

(b) If an impairment is determined to exist, the following must occur:

(i) The loss due to the impairment shall be accounted for as a loss;

(ii) The intangible asset has a useful life that must be estimated and is

determinable; and

(iii) The carrying value, or the value remaining after accounting for the impairment, shall be amortized using the straight-line method over the remaining estimated useful life.

V. Selling or Disposing of Intangible Assets

In selling or disposing of intangible assets, the District shall calculate and report a gain or loss on the sale or disposal. The gain or loss shall be calculated by subtracting the net book value, which consists of the historical cost less any accumulated amortization, from the net amount realized on the sale or disposal.

VI. Application of Policy

The requirements of this Policy shall apply to all financial statements covering periods beginning after June 30, 2009. The requirements of this Policy shall apply retroactively to intangible assets that were in existence from July 1, 1980, through June 30, 2009. However, the following intangible assets shall not be retroactively reported as capital assets:

(1) Intangible assets considered to have an indefinite useful life as of June 30, 2009;

(2) Intangible assets considered to be internally generated as of June 30, 2009;

(3) Outlays from internally generated computer software incurred in the application development stage on or prior to June 30, 2009;

(4) Any intangible asset held by a “Phase 3” District, characterized as such for purposes of implementing GASB Statement 34.

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Approved: 7/8/13                                  Reviewed:  3/11/19                                             Revised: