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Statewide Policy Directory

Title Description Last Updated
1000.01 - Overpayments Audit and Recovery Program Policy - Overpayments Audit and Recovery Program Inadvertent overpayments occur as a result of pricing errors, neglected rebates and discounts, miscalculated freight charges, unclaimed refunds, erroneously paid excise taxes, and other related errors. North Carolina G.S. 147-86.22 requires the Office of the State Controller (OSC) to negotiate a contract with a third party to perform an audit process of inadvertent overpayments by State agencies.
101.01 - Statewide Accounting Policy - Cash, Cash Equivalents, and Pooled Cash

Cash and cash equivalents consist of the pooled cash accounts of the State Treasurer and the following items managed by agencies and institutions of the State and its component units: 

  • Undeposited receipts 
  • Petty cash 
  • Checking accounts outside the State Treasurer 
  • Time deposits outside the State Treasurer, excluding certificates of deposit, which are considered investments. 
101.02 - Statewide Accounting Policy - Inventories These inventories consist of general supplies and materials. Where inventories are distributed among several locations, the cumulative total value should be considered in determining materiality. The exception to the foregoing is postage. Because of its liquidity, postage must be recorded when it exceeds $100.00 in value.
101.03 - Statewide Accounting Policy - Prepaid Items Prepaid items are payments for services that benefit more than one accounting period, such as insurance, rent, and subscriptions. In governmental funds (general, special revenue, capital projects, and permanent), which follow the modified accrual basis of accounting, prepaid items should be accounted for using the purchases method (i.e., considered expenditures when purchased). Balances of prepaid items in governmental funds should not be reported as assets.
101.04 - Statewide Accounting Policy - Restricted Assets For governmental funds of the State primary government, the accounting classification of restricted assets will be handled at a statewide level. For year-end reporting, OSC staff will prepare worksheet entries on the fund level working trial balances to reclassify unrestricted cash and cash equivalents, investments, and receivables to restricted accounts. For proprietary funds of the State primary government and for component units, the accounting classification of restricted assets should be handled at the agency level.
101.06 - Statewide Accounting Policy - Net Position Net Position Restricted by Enabling Legislation (GASB COD 1800): For the State primary government, constraints placed on net position use by enabling legislation are not reported as net position restrictions since such constraints are not legally enforceable. An Attorney General Advisory Opinion referenced that the Governor, pursuant to his constitutional authority under Article III, Section 5(3), may use resources restricted by enabling legislation in his discretion to meet a budget shortfall. Legal enforceability means that the State can be compelled by an external party, such as citizens, public interest groups, or the judiciary to use resources created by enabling legislation only for the purposes specified by the legislation.
101.5 - Statewide Accounting Policy - Fund Balance Reporting For classification of governmental fund balances, the State assumes an expenditure to be made from the most restrictive resource when more than one fund balance classification is available for use.
102.01 - Statewide Accounting Policy - Capitalization/Classification A capital asset is property, such as land, land improvements, easements, buildings, equipment, works of art and historical treasures, and infrastructure, with a cost equal to or greater than $5,000 and a useful life of two or more years. Capital assets are acquired for use in normal operations and are not for resale. These assets may be subject to depreciation. Effective FY2024, assets that are below $5,000, that are purchased as a group and have a significant cost are subject to capitalization per GASB Implementation Guide 2021-1 Section 5.1. A financial reporting update with detailed instructions regarding detailed implementation procedures for small asset group purchases is posted on the OSC website. Exceptions to the $5,000 capitalization threshold will require written approval by the Office of the State Controller (OSC).
102.02 - Statewide Accounting Policy - Additions/Renovations/Improvements Additions are considered separate assets and should be capitalized if the cost equals or exceeds the $5,000 capitalization threshold. An addition increases the physical size or operating capabilities of an asset through expansion or extension.
102.03 - Statewide Accounting Policy - Maintenance Maintenance expenses are incurred to keep assets in normal operating condition and to help maintain the original use of the asset. Maintenance expenses do not extend the life of the asset beyond the expected useful life at acquisition or increase the future service potential of the asset. Maintenance costs are incurred to keep the asset operational throughout its useful life. Therefore, the replacement of roofs, plumbing and carpet are typically classified as maintenance costs. Other examples are engines on the ferries which are rebuilt after each season. This was an expected cost at the time of purchase. It does not extend the life of the asset longer than originally intended, so the costs are expensed.
102.04 - Statewide Accounting Policy - Libraries A library is a repository for literary and artistic materials such as books, e-books, periodicals, newspapers, pamphlets, videos, etc. kept for reading or reference. Books and other library materials should be inventoried if the books/library materials have a useful life of 2 or more years and have a cumulative cost of $5,000 or more. This threshold is applied at each library level and not the agency level. All agencies should expense library books and other library materials in the year of acquisition.
102.05 - Statewide Accounting Policy - Depreciation The straight-line and units of output methods of depreciation, with an assumed salvage value of zero, are the recommended methods of depreciation. It is also recommended that depreciation for partial periods be computed using either the half-year convention or on the basis of the nearest full month. Straight-line is a time-based method used when the service life of the asset is affected primarily by the passage of time. Units of output should be used when the service life of the asset is affected primarily by the amount the asset is used. See table below for depreciation method guidelines.
102.06 - Statewide Accounting Policy - Fixed Asset Grants When the State does not hold title to property acquired with federal funds, the property should not be capitalized. (Possession does not equal ownership). The property, however, can be inventoried for tracking purposes.
102.07 - Statewide Accounting Policy - Land Land is the real estate property held by the State. It can be purchased or donated. Since land is considered not to have a limited useful life and its salvage value is unlikely to be less than its acquisition cost, land is not depreciated.
102.08 - Statewide Accounting Policy - Buildings Buildings are structures that are permanent in nature and have an asset life of two or more years. They are subject to depreciation.
102.09 - Statewide Accounting Policy - Infrastructure Infrastructure assets are long-lived capital assets that normally are stationary in nature and normally can be preserved for a significantly greater number of years than most capital assets. Examples of infrastructure assets include roads, bridges, tunnels, drainage systems, water and sewer systems, dams, and lighting systems. Infrastructure assets acquired prior to July 1, 2001 may be classified as part of other capital assets (e.g., buildings).
102.10 - Statewide Accounting Policy - Intangible Assets This policy applies to intangible assets other than leasing arrangements reported under GASB Statement 87, Leases; and subscription-based information technology arrangements (SBITAs) reported under GASB Statement 96, SBITAs. See OSC Statewide Accounting Policy 105.7 – Leases and SBITAs for further details on capitalization thresholds and other information pertaining to leasing arrangements.
102.11 - Statewide Accounting Policy - Collections Except as discussed below, works of art, historical treasures, and similar assets should be capitalized at their historical cost or acquisition value at the date of donation (assets donated prior to July 1, 2015 are recorded at their estimated fair value at the date of donation) whether they are held as individual items or in a collection.
102.12 - Statewide Accounting Policy - Transfers of Capital Assets Capital assets should not be revalued when transferred between funds and/or component units of the State’s financial reporting entity. In these circumstances, the transferee should recognize the capital assets at the transferor’s carrying value. These intra-entity transfers include donations or purchases/sales of capital assets between any combination of the funds and/or component units of the State’s financial reporting entity including State agencies, universities, community colleges, and all other component units of the State.
102.13 - Statewide Accounting Policy - Impairment of Capital Assets State agencies should assess their capital assets at least annually to determine if they have any impaired capital assets with material carrying values. OSC will request information relating to capital asset impairments in the year-end Annual Comprehensive Financial Report (ACFR) package. Based on the information provided, OSC will determine if the impairment needs to be recognized in the State’s ACFR. OSC will calculate any impairment losses and will make entries in NCAS (or will provide entries to agencies) to report any such losses. In addition, OSC will notify state agencies of the adjustment amount that should be recorded in the fixed asset system to reduce the carrying value of impaired capital assets. State agencies should post these adjustments to the fixed asset system during the next fiscal year as a prior period adjustment.
102.14 - Statewide Accounting Policy - Internal Policy/Procedures Manual for Capital Assets Each agency is required to have an Internal Policy/Procedure Manual to detail the agency's capital asset requirements. This manual will not replace the requirements set forth in the statewide policies, but will individualize the statewide policies/procedures for each agency.
102.15 - Statewide Accounting Policy - Tagging Maintaining a positive identification of assets is the primary purpose of tagging. Tagging is important to: 

  • Provide an accurate method of identifying individual assets, 
  • Aid in the taking of physical inventory, 
  • Control the location of all physical assets, 
  • Aid in maintenance of fixed assets, and 
  • Provide a common ground of communication for both the accounting department and the assets' users. 
102.16 - Statewide Accounting Policy - Physical Inventory A physical inventory of capital and inventoried fixed assets is taken to verify that assets recorded are physically located in an agency. Inventories are taken at least annually. The inventory is taken by someone who does not have custody of the assets, nor responsibility for receiving, checking in, tagging, and recording the assets.
102.17 - Statewide Accounting Policy - Missing/Stolen Assets Management is responsible for implementing procedures for maintaining control over and the safeguarding of assets. Physical security measures over facilities and authorized personnel must be established and documented.
102.18 - Statewide Accounting Policy - Changing Location of Assets Prior to changing the assigned location of equipment within an agency, Part A of Form FAS-1 (or equivalent agency form) must be completed. The fixed asset number, description, current building and room number, and the reassigned building and room number must be included on this form. The form must be signed by the Division/Section Manager and transmitted to the Fixed Asset Officer. The Fixed Asset Officer should approve all location changes. After the location changes are approved, the Fixed Asset Officer will enter the location changes into the Fixed Asset System. Also, a copy of this form will be signed and returned indicating that inventory records have been adjusted.