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

2. 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*

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

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

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

6. 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. 

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

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

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

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

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

12. 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.

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

14. Current Year

15. Remaining Value (Salvage)

16. Depreciation

17. Liability

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

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

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

21. Capital Status

22. Capital Risk

23. Normalized Capital Status

24. Normalized Capital Risk

25. 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)

26. Thank you
Questions?