A Review of DOT Compliance with GASB 34 Requirements (2004)

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11 CHAPTER 1 SUMMARY OF PREVIOUS SURVEYS AND LITERATURE REVIEW Before drafting survey questions, the research team reviewed previous surveys, existing literature, and current studies on the approaches taken by state DOTs to comply with GASB 34 requirements. The research team (1) uncov- ered the strengths and weaknesses in previously conducted surveys and (2) integrated areas of concern for the DOTs into the draft survey. TENNESSEE DOT SURVEY—JUNE 2001 PB Consult’s earlier participation in (1) the survey con- ducted by the Tennessee DOT and (2) the GASB 34 confer- ence sponsored by the Tennessee DOT provided valuable insight into constructing a more comprehensive survey instru- ment. Of the 37 responding states, close to 60% had decided on or were leaning toward the modified approach. This early inclination toward the modified approach led the research team to incorporate many detailed questions about the mechanics of implementing the modified approach. However, because at least 40% of the states anticipated implementing the depre- ciation method, the research team balanced the NCHRP sur- vey with a broad array of detailed questions on depreciation as well. The Tennessee DOT survey provided an interesting back- drop to the results of the NCHRP survey. Although 60% of states were initially inclined toward implementing the mod- ified approach, this percentage decreased to 44% when the states reported for the first time under their respective pro- grams for GASB 34 compliance. NATIONAL ASSOCIATION OF STATE AUDITORS, COMPTROLLERS, AND TREASURERS SURVEY The research team studied a 2001 survey and an “Imple- mentation Database” originally developed in 1999 by the National Association of State Auditors, Comptrollers, and Treasurers (NASACT). The database was updated on a rolling basis as governments submitted questions and responses. The database was set up as a clearinghouse for questions and pro- posed solutions that arose as states and localities began to implement GASB 34. This review of these resources pro- vided insight into the challenges facing public entities prepar- ing to implement GASB 34. The NASACT survey findings were that, of the 28 respon- dents, approximately one-half (13) planned to implement the modified approach and an equal number of states planned to implement depreciation; two states were planning to imple- ment both methods. The NASACT survey and database provided a great deal of information about the states’ most challenging issues. GEORGIA DOT SURVEY With 100 questions, the Georgia DOT survey explored many implementation issues in detail. The Georgia DOT sur- vey provided useful indications for the NCHRP survey in anticipating the challenge states would have in developing a method to establish historical cost and current value. How- ever, the pool of participating states was limited to 27. Of the responding states, 14 (52%) anticipated that they would later implement the modified approach for roads; 12 states (44%) anticipated that they would use the modified approach for bridges. NCHRP SURVEY In performing the NCHRP survey, the research team gained important insights to further probe from the previ- ous survey questions and results. Those areas included, but were not limited to, the following categories: • Methods of classifying assets, • Key issues by classifying asset, • Most challenging compliance issues, • Innovative approaches by classifying asset, and • Impact on departmental operations and finances. As a result of this review and the research team’s own knowledge of asset management and GASB 34, the research team identified several topics for further exploration. Mem- bers of the research team independently proposed questions to be asked in phone interviews with select DOTs. After a

review process, the team used a final set of 14 questions to conduct phone interviews with 11 DOTs. The research team conducted interviews lasting between 30 and 60 minutes, which produced additional insights to help develop the larger survey. Typically, the person interviewed was the DOT Chief Financial Officer (CFO), although in some cases the person 12 heading the GASB 34 implementation initiative had a differ- ent title. The research team reviewed these preliminary sur- veys to determine additional issues not yet covered by the team and to word questions using terminology that was com- mon and clear to those who would be responding to the longer survey.