Asset Management and Disposal Flashcards

A public works department declares one of its five-year-old sedans as no longer needed for its operations. The vehicle is in good working condition. What is the MOST appropriate first step for the asset manager to take?

Answer: Transfer the vehicle to another agency department that has a documented need for it.

The primary goal of asset management is to maximize the useful life and value of an asset for the public entity. Before external disposal, the first logical step is to determine if the asset can be redeployed internally, which represents the highest value to the agency by avoiding a new purchase.

Which of the following is the primary objective of conducting a periodic physical inventory of a public agency's capital assets?

Answer: To verify the accuracy of property records, confirm the physical location of assets, and identify any unrecorded disposals or losses.

A periodic physical inventory is a fundamental control process. Its main purpose is to reconcile the official property records with the actual assets on hand, ensuring accountability, safeguarding public property, and maintaining accurate financial records.

A city's IT department has 100 obsolete desktop computers and 50 old CRT monitors that are non-functional. Due to the presence of lead and other hazardous materials, what is the most responsible and compliant method of disposal?

Answer: Contracting with a certified e-waste recycling vendor who can provide a certificate of destruction.

Electronic waste (e-waste) often contains hazardous materials regulated by federal, state, and local laws. Disposing of it in a landfill is typically illegal and environmentally harmful. The proper method is to use a certified e-waste recycler who can safely handle the hazardous components and ensure any data is properly destroyed.

A public transit agency has two identical, aging buses. One bus has a failed engine that is too costly to repair, while the other is operational but requires a specific transmission component that is difficult to source. What asset management strategy would be most cost-effective?

Answer: Cannibalizing the needed transmission component from the bus with the failed engine to repair the operational bus.

Cannibalization is the practice of removing serviceable parts from one piece of equipment to install them on another. In this scenario, it is a cost-effective strategy to keep one vehicle operational by using a part from an otherwise non-repairable vehicle, especially when the part is in short supply.

A public agency is purchasing a new, specialized road grader and wishes to dispose of its old one. The procurement officer determines that the value offered by the vendor for the old grader is fair and will directly reduce the price of the new purchase. This method of disposal is known as a:

Answer: Trade-in

A trade-in is a disposal method where an old item of property is applied as partial payment toward the purchase of a new, similar item. It is often a convenient and efficient process, though it should be evaluated against other disposal methods like auction to ensure best value.

What is the primary financial objective of a well-managed surplus property disposal program for a public agency?

Answer: To maximize the net financial return to the agency from the sale of assets.

While speed, inter-agency cooperation, and administrative efficiency are important considerations, the primary fiduciary responsibility and financial objective is to maximize the net return on the sale of surplus assets. This ensures the public receives the greatest possible value from property it originally funded.