1.    PURPOSE 

1.01     The purpose of this Statement of Policy and Procedure is to provide appropriate controls over the purchase, recording, amortization and disposition of capital assets.

2.    SCOPE

2.01     This policy applies to the CEO, CFO, the Controller, Project Directors and all employees involved in the purchase and handling of organization assets.

3.    POLICY

3.01     Assets with a cost exceeding $5,000 shall be capitalized. In the case of the purchase of a set or group of items, this limit applies to the entire set or group. (For example, one laptop costing $1,000 would not be capitalized, 6 laptops costing a total of $6,000 would be capitalized.)

3.02     Capital asset purchases or leases approved in the capital budget must be authorized by the appropriate staff based on approved purchase authorization limits approved by the Board as follows:

3.03     For MakeWay Foundation, capital asset purchases not approved in the capital budget must be authorized by the CFO.

3.04     MakeWay shall carry insurance at replacement levels for all capital assets.

3.05     Physical inventories of capital assets will be conducted once annually and reconciled to records. Discrepancies will be investigated and reported to the CEO / Project Director.

3.06     In the event of dissolution, assets will be used to meet the financial obligations of the organization and any residual assets or residual value will be donated to a qualified donee.

3.07     The Organization will use the straight-line method of amortization for fixed assets.

4.    RESPONSIBILITY

4.01     It is the responsibility of the CEO and Project Directors to ensure that capital costs are authorized appropriately, both at time of commitment and at time of payment, that they are consistent with the intent of the capital budget, and that appropriate internal controls are established over asset purchases.

4.02     It is the responsibility of the CFO / Controller in coordination with the Project Director to ensure that appropriate insurance coverage and security measures are in place to protect the organization’s major assets.

4.03     Responsibility of the CFO;

(a)     It is the responsibility of the CFO to assess cash flow impacts of major asset purchases, and to advise the CEO / Project Director on the pros and cons of specific lease vs. purchase decisions. 

(b)     It is the responsibility of the CFO not to approve capital expenditures which will put the organization onto tenuous financial footing.

4.04     It is the responsibility of the Department Manager in coordination with finance department to perform an inventory and reconciliation of assets annually.

5.    DEFINITIONS 

5.01     “Amortization” is the process of taking into expense an appropriate portion of the cost of a capital asset each year. 

5.02     “Capital asset” refers to anything of enduring value. It includes tangible assets

5.03     “Capitalization” means recording a disbursement as an asset rather than an expense.

5.04     “Capital budget” means a financial plan outlining expected capital purchases, which is formally reviewed and approved by the Board of Directors.

5.05     “Controls” are mechanisms such as reports, reviews and procedures that are designed to ensure policies are carried out and reduce the risk of fraud or error.

5.06     “Depreciation” is another word for amortization, although it is only applied to tangible assets

5.07     “Dissolution” means the wind-down of the organization’s operations and disposition of obligations and assets existing at the time.

5.08     “Fixed assets” are tangible capital assets such as buildings or equipment.

6.    REFERENCES