CWIP Theory & Accounting

Presented by NOAA Financial Statements Branch June 23, 2006

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 triggering depreciation. A generally accepted accounting principle required of all Federal Agencies Reflects the fair market value at point X in the CWIP gestation timeline. Reported on NOAAs and DOCs Quarterly and Year End Financial Statements.
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CWIP Theory & Accounting

Costs:
The classification assigned to the resources that will be included in the final value of the depreciable item constructed. Represents the resources that meet the criteria of an asset (to be reported on the Balance Sheet.) Are identified only with goods received or delivered, and or services performed.
If you havent got it its not a cost.

Received or Delivered Trumps:

Ordered Payable Committed In transit/enroute/partial performance, and Paid 3

CWIP Theory & Accounting

Expenses:
All other CWIP Resources used that wont be part of the final depreciable value.
Reported on NOAAs Income Statement

CWIP Theory & Accounting

Whether you know it or not:
every classification of each cwip resource, as either an asset or an expense, helps build NOAAs 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 the resources 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.

CWIP Theory & Accounting

KPMG, NOAAs 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

CWIP Theory & Accounting

Whats Driving This Preoccupation
Materiality Concerns
CWIP is:
50% of NOAAs Total PP&E The lynch pin in assessing the complete & reliability of NOAAs Balance Sheet

NOAAs Financial Statements fail annual audit:

If CWIP Balances are not fairly stated as assets that reflect goods and services received or delivered

DOCs Financial Statements fail their audit:

NOAA comprises over 50% of DOCs 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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(former Finance ASCs) Financial Reporting Division Financial Policy and Compliance Division Administrative Support Group Site Map Quick Links Audit CBS (FSD) CWIP Fed Ex Finance Handbook Internal Controls Motorpool Object Class Policy Purchas e Cards

offices on financial management policies and procedures and provides special-purpose financial information and analyses on matters of immediate concern to line/staff offices, the CFO, and the Office of the Under Secretary. Jon Alexander
Director, Finance Office/Comptroller Phone: (301) 444-2102 Staff Directory

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and Client Services Division (former Finance ASCs) Financial Reporting Division Financial Policy & Compliance Division Administrative Support Group Site Map Quick Links Audit CBS (FSD) CWIP FedEx Forms Internal Controls Motorpool Object Class Policy

INTERNET EXPLORER

<ACWIP Reconciliation Template Excel Version Lotus Version CWIP Instructions for completing CWIP Reconciliation Spreadsheet NEW CWIP Policies (Use computer login and passcode) Activity Manager's Reconciliation CHECKLIST Line Office/M&B Chief Reconciliation CHECKLIST NEW
NEW

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Your Turn to Speak Questions

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