Below are the first 10 and last 10 pages of uncorrected machine-read text (when available) of this chapter, followed by the top 30 algorithmically extracted key phrases from the chapter as a whole.
Intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text on the opening pages of each chapter.
Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.
Do not use for reproduction, copying, pasting, or reading; exclusively for search engines.
OCR for page 46
46
CHAPTER 6
INFORMATION GAPS AND RESEARCH NEEDS
METHODS FOR CONDITION ASSESSMENTS aged or used. Nevertheless, the team's research also demon-
AND PRESERVATION strates that many DOTs (in fact, a slight majority) selected
the depreciation approach for FY2002 because of a lack of
Summary comfort with condition assessments and preservation model-
ing and the uncertainty of having to shift from the modified
While conducting the initial survey and follow-up case
approach to the depreciation model if targets are not met.
study interviews on GASB 34 implementation, the research
It has been suggested that if a more consistent method for
team became aware of some issues and concerns of the
condition assessments and preservation could be developed,
state DOTs requiring additional information and research. As
a long-term approach to reporting condition assessment data
acknowledged by GASB Chair Tom L. Allen, "Statement 34
in the financial statements that would relate to funding of
is the most significant change to occur in the history of gov-
preservation (similar to how pension expense is now reported
ernment financial accounting." A change of this magnitude
by employers--see NCHRP Web Document 63) would be
undoubtedly will require several years for affected agencies
more meaningful than the current modified approach. If
and their financial and management systems to fully absorb
GASB ultimately were to approve an infrastructure financial
and make necessary adjustments. More specifically, there is a
reporting approach similar to that used for pensions, then
need for more detailed research on condition assessments and
some improvements suggested below might be implemented.
preservation methods that could (1) allow more integration of
Parameters would be used that would bring consistency to
asset management data into the financial statement reporting
the process, but allow divergence in practice, based on the
process and (2) lead to better preservation results.
characteristics of the state infrastructure.
GASB staff have indicated an interest in tying condition
Background assessment and preservation data to the financial statements
(i.e., this would be desirable within the next 5 years).
GASB 34 required the implementation of a modified The methods so developed would NOT be intended to com-
approach for the incorporation of condition assessment data pare state DOTs--indeed, pension reporting does not com-
into the financial statements. GASB reviewed a number of pare pension plans of governments. Rather, the methods
approaches generally based on methods of measuring whether would be intended to bring consistency in approach of mea-
or not infrastructure assets were being preserved. During the suring how well the DOT is preserving infrastructure in com-
development of Statement 34, GASB heard from engineers parison with where the DOT wants to be with preservation.
and transportation finance officers and learned that, although Unlike the current modified approach, the financial state-
these approaches are of great value in managing infrastructure ments would directly report estimated preservation require-
assets, they have not developed to the point at which "consis- ments as a separate element of expenses, rather than identify
tent methods or measurement scales can be used to assess that information reported as "required supplementary infor-
condition's sufficient for recognition in financial statements." mation." This is exactly the type of measurement pension
The Board concluded that "additional research is needed" financial statements report--funding requirements based on
to determine if a workable, comprehensive "preservation one of several actuarial parameters.
method" can be developed (GASB 34 paragraph 340). Consistent methods would lead to more comfort among
More recently, the Board has identified a long-term goal to DOT and finance personnel with using condition assessments.
move toward finer gradations of review rather than the cur- Most important, GASB 34 has already given momentum to
rent "on-off switch" determination on whether preservation better asset management. The development of consistent
targets have been achieved. The Board plans to add a project methods leading to a different financial statement approach
to its agenda to address this issue. will continue that momentum.
The research has shown that many transportation and To assist in this process, the research team suggests that
finance officials think that depreciation of infrastructure is the list of specific topics below warrant additional investiga-
meaningless because it does not reflect how assets are man- tion. Further, this investigation should be conducted with
