Despite the sharp increase in the capitalization threshold, almost all of the  surveyed agencies responded that they maintained property records for  PP&E not capitalized on the balance sheet, for purposes of safeguarding  PP&E, supporting agency operations, or fulfilling external reporting  requirements. Federal Capitalization Thresholds Differ Significantly from the Private Sector

Federal capitalization thresholds are significantly higher than those  reported by the 12 private sector entities we surveyed. We found that the  agency capitalization thresholds for personal property ranged from $3,000  to $200,000, and in some cases were 40 times higher than the maximum  levels reported by the private sector participants. Useful lives for real property at the surveyed  federal agencies ranged from 5 to 100 years, which is a wide range that  encompasses numerous and varying types of real property. The useful life policies within the federal government were generally  similar to those found in the private sector. The few differences that we identified between federal agency and private  sector useful lives are due to the different types of assets owned by the  survey participants rather than any systemic differences in the useful life  policies. Objectives, Scope, and Methodology

The objectives of this report were to determine (1) what are the federal  government’s current capitalization threshold practices for PP&E and how  such federal government policies compare to those practices being applied  to PP&E in the private sector and (2) what are the useful life policies within  the federal government and how they compare to those used in the private  sector.
What GAO Found

In passing the 1990 Chief Financial Officers Act and a range of other financial management reform legislation, Congress has sought to overcome the historical lack of reliable, useful, and timely information with which to make informed decisions, measure and control costs, manage for results, and ensure financial accountability on an ongoing basis. Reported capitalization threshold levels at the 14 agencies GAO surveyed ranged from zero to $250,000. Despite the sharp increase in the capitalization threshold, all but one of the 14 agencies responded that they maintained property records for the government's general property, plant, and equipment (PP&E) not capitalized on the balance sheet, citing safeguarding of PP&E and supporting agency operations as the key reasons for maintaining such information. Federal capitalization thresholds are significantly higher than those reported by the private sector entities GAO surveyed. In some cases, the federal capitalization thresholds for real property were up to 50 times higher than those noted in the private sector. In contrast to the wide variance between federal agency and private sector capitalization threshold policies, federal agency useful life policies were generally similar to those found in the private sector. Estimated useful life classifications within the federal government ranged from 2 years to 40 years for personal property and 5 years to 100 years for real property. GAO did identify several differences attributable to the variety of assets owned by the entities that participated in its survey, rather than any systematic differences in useful life classifications.