1. Government accounting does not permit depreciation to be charged on the opera
ID: 2504698 • Letter: 1
Question
1. Government accounting does not permit depreciation to be charged on the operating statements of governmental funds. Present arguments for reporting depreciation and arguments against reporting depreciation.
2. What is "deferred maintenance?" What is its possible role in government financial reporting?
3. Governmental investment policies have been sharply criticized because of significant losses incurred by certain governments. What is the nature of the program that is being criticized? What should be the role of accounting in determining and reporting investment strategies?
Explanation / Answer
1. Arguments
It will make the long term planning for your building much easier, especially for lay people who do not have any familiarity with capital planning, replacement costs or the complex nature of most multi-residential buildings. New council members can certainly benefit from having this information available to them.
- The report is an excellent resource for information about the physical components of your building. Think of it as an encyclopedia of all of the pieces that make up your home. A full and detailed list of components is included in a Depreciation Report, from the roof to the foundation and everything in between. Just about every minor detail would be covered in a good Depreciation Report, even items as small as light fixtures and furniture in common areas. The ability to quickly look up what type of boiler you have, the traffic coating in your parkade, or the composition of your wall cladding can be indispensable.
- The experience of other jurisdictions which are ahead of B.C. in this field suggests that eventually just about all strata corporations will conduct a Depreciation Report.
- Anecdotal evidence from realtors and bankers has already suggested that savvy buyers are looking for buildings with Depreciation Reports, well-funded reserves, and evidence that the strata corporation is enacting a plan to deal with the long term costs of maintaining their building. We do not profess to be experts in the real estate market, and encourage you to talk to a realtor or your home lender to see what they have to say about the subject.
Argument against
If we have a report prepared, and don
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