UITS All Staff Conference 11/2/2016 M. Mundrane Capital Planning II UITS All Staff Conference 11/2/2016 M. Mundrane

Capital Budget and Planning Q: Why Should I care about budgets? Authority Ability A: Any individual empowered with financial decision rights should have suitable associated financial acumen. And ….. Internal audit is still making me give this talk*

Accounting Background Assets = Liabilities + Equity House = Loan+ Equity 200,000= 120,000+ 80,000 Everybody knows exactly what this means!

Capital Planning Not labor Durable assets Lifespan exceeds financial boundaries Assumed ongoing activity Size or granularity works against you Cannot be operationalized

Useful Life Useful life is the estimated lifespan of a depreciable fixed asset, during which it can be expected to contribute to operations. 

Remaining Value (Salvage) Salvage is the value, calculated off baseline, of the useful life of a depreciable fixed asset that has not been lost due to the expenditure of its usable lifespan. 

Remaining Value (Salvage) Where V – value y – year b – baseline n – lifespan * all in years

Depreciation Depreciation is the systematic reduction in the recorded value of a fixed asset over its usable lifespan.

Depreciation Where D – depreciation y – year V – value b – baseline

Liability A liability is an obligation that is reported on a balance sheet. It represents an immediate reduction of equity.

Liability Where L – liability y – year D – depreciation C – cost to deploy

End of Life Risk An end of life risk is a liability that may or may not be reported on a balance sheet. It represents an effective reduction of financial position even though its resolution may remain incomplete for an indeterminate period of time.

End of Life Risk Where R – risk y – year V – original value b – baseline D – depreciation C – cost to deploy

Current Year

Remaining Value (Salvage)

Depreciation

Liability

Remaining Value (Salvage) Remaining value tracked on a per year basis.

Depreciation Depreciation tracked on an annual basis is still the difference between baseline value and salvage value.

End of Life End of life is tracked as the depreciated value when salvage has dropped to zero plus associated cost to deploy.

Capital Status

Capital Risk

Normalized Capital Status

Normalized Capital Risk

Capital Plan Retain Track Report Original value (baseline) Cost to deploy (immediate liability) Track Salvage (remaining value) Depreciation (loss in value) Report Capital status (where are we now) Capital risk (end of life)

Thank you Questions?