CWIP Theory & Accounting Presented by NOAA Financial

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CWIP Theory Accounting

• Presented by
• NOAA Financial Statements Branch
• June 23, 2006

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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

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CWIP Theory Accounting

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

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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.

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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

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CWIP Theory Accounting

• Whats Driving This Preoccupation
• Materiality Concerns
• CWIP is
• 50 of NOAAs Total PPE
• 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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Your Turn to Speak

• Questions
• Concerns
• Recommendations