Real Property and Financial Management Policy

Table of Contents

  1. Purpose

  2. Authorities

  3. Responsibilities

  4. Effective Date

  5. Policy

  6. Property Classifications

  7. Capitalization Criteria

  8. Records

  9. Valuation

  10. Depreciation

  11. Estimated Useful Life

  12. Transaction Dates

  13. Maintenance

  14. Glossary

  1. Purpose

    This document provides the Department of the Interior's (DOI) real property accounting policies and procedures developed in accordance with Federal Management Regulations (FMR) and Statements of Federal Financial Accounting Standards (SFFAS). These policies are provided to ensure effective financial control over DOI owned and leased real property.The financial policy cited in this document is intended to provide reasonable assurance that the objectives of the Department are being achieved in the following categories:

    • Effectiveness and efficiency of operations, including the use and disposition of the Department's resources.

    • Reliability of financial reporting, including reports on budget execution, financial statements, and other reports for internal and external use.

    • Accountability and control over all Departmental real property.

    • Compliance with applicable laws and regulations.

    Real Property is any interest in land, together with structures, fixtures and improvements of any type located thereon. The term "real" should be associated with realty, land or something attached thereto. Real Property may also include heritage assets and land. When accounting treatment for specific circumstances is not discussed in this document, ask your Financial Management Office for guidance.


    This policy is based on and supports the requirements of SFFAS Number 3, "Accounting for Inventory and Related Property," SFFAS Number 6, "Accounting for Property, Plant and Equipment" (as amended by SFFAS Numbers 11 and 16), and SFFAS Number 8, "Supplementary Stewardship Accounting" (as amended by SFFAS Numbers 11 and 16)." The SFFAS standards can be found at:


    Assistant Secretaries, Bureau Directors, bureau financial officials, property officers and program managers all have a role in ensuring that real property is properly managed and reported, and that real property and financial records are reconciled. The roles and responsibilities below can only be accomplished with close cooperation among all parties. Specific responsibilities of financial and real property managers are listed below. The list focuses on financial-related responsibilities and does not include all responsibilities, e.g., safeguarding assets.

    1. Chief Financial Officers of Bureaus and Offices are responsible for:

      1. Ensuring that adequate financial controls are in place and financial records and reports accurately reflect the status of real property in accordance with these policies.

      2. Ensuring independent control of data in the accounting system.

      3. Reconciling accounting system data to the official real property subsidiary records at least monthly.

      4. Maintaining documentation of account reconciliations. This documentation must be available for review by the auditors.

      5. Maintaining financial records in cooperation with Real Property Officers and Facility Managers for each capital facility project in progress. These records are the source for entries to the general ledger work in progress accounts. The Contracting Officer or their Representative, in consultation with the Real Property Officer, is responsible for furnishing information to identify costs applicable to construction work in progress.

      6. Maintaining close liaison with property management, facilities management and other personnel concerned with real property to provide assurance that values reported are accurate.

    2. Persons who manage real property are responsible for:

      1. Ensuring that real property accounts are reconciled and inventories are documented.

      2. Maintaining all records related to real property, including records of financial transactions related to real property.

      3. Reconciling official real property subsidiary data to the accounting system data at least monthly.

      4. Performing physical inventories. The inventory must be reconciled with financial and property records, and the accuracy of the results must be certified by the accountable officer or designee. These physical inventories must be coordinated with the OIG and other auditors.

      5. Maintaining documentation of physical inventories. This documentation must be available for review by auditors.

      6. Maintaining close liaison with Chief Financial Officers and other personnel involved with real property to provide assurance that values reported are accurate.


    This policy is effective upon issuance with the exception of capitalization thresholds and useful lives of currently held property.

    1. Capitalization thresholds are effective for transactions that occur after October 1, 2003.

    2. New useful lives for real property are effective October 1, 2003. The useful lives of currently held property need not be changed to reflect the new useful lives. Depreciation is changed prospectively, thus, no change would be made to accumulated depreciation reported to date.

Early implementation of this policy may be requested by bureaus/offices by following procedures outlined in the Policy section below.

  1. POLICY:

    Real property owned or leased by the DOI must be properly accounted for in real property accountability records. Any changes to real property owned or leased by DOI must be tracked and reflected in real property accountability records. Each real property acquisition, improvement, construction, donation, transfer or upgrade that meets the overall capitalization criteria will be recognized in the financial records and depreciated.

    Exceptions to this policy may be granted only by the Director, Office of Acquisition and Property Management (PAM). Consideration of exceptions will be made by the Director, PAM and the Director, Office of Financial Management. Requests for exceptions to this policy must be justified and submitted, in writing, by the Bureau Director to the Director, PAM, with an analysis of the impact of the requested exception on the financial statement.


    Real property is defined as any interest in land, together with structures and fixtures, appurtenances, and improvements of any kind located thereon. The term "real" should be associated with realty, land, or something attached thereto.

    1. Buildings, Other Structures and Facilities.

      1. Buildings, Improvements, and Renovations. Buildings are defined as any structure with a roof and commonly enclosed by walls, designed for storage, human occupancy, or shelter for animals, distinguished from other structures not designed for occupancy (such as fences or bridges). Buildings include offices, warehouses, post offices, hospitals, prisons, schools, housing and storage units. Fixed equipment, that is permanently attached to and a part of the operation of the building, and cannot be removed without cutting into the walls, ceilings or floors, is also included. Examples of fixed equipment include plumbing, heating and lighting equipment, elevators, central air conditioning systems and built-in safes and vaults. The cost of Federal Government-owned buildings acquired for and used in providing services or goods includes the cost of acquisition, renovation, improvements, restoration, or reconstruction of multi-use heritage assets, when those costs are directly tied to the conduct of Federal Government operations.

      2. Other Structures and Facilities. Structures and facilities include such things as airfield pavements, harbor and port facilities, power production facilities and distribution systems, reclamation and irrigation facilities, flood control and navigation aids, utility systems (heating, sewage, water and electrical) when they serve several buildings or structures, communications systems, traffic aids, paved roads (see note regarding exceptions), bridges, non-Stewardship land easements, railroads, monuments and memorials and nonstructural improvements such as trails, sidewalks, parking areas and fences. The costs of structures and facilities include costs of acquisition and improvements. The presence of office space enclosed by walls and a roof within a structure does not change the nature of the underlying structure, e.g., Hoover Dam remains a structure even though office space is included in the dam. (Refer to Section VII. Capitalization Criteria regarding capitalizing structures and facilities.)

      3. Water Projects Subject to User Charges., Water projects subject to user charges consist of multi-purpose projects where construction costs are allocated among the various project purposes, e.g., irrigation water, municipal and industrial (M&I) water, hydroelectric power generation, flood control, recreation, and fish and wildlife enhancement. Some of these project purposes, e.g., irrigation water, M&I, and power are generally reimbursable; thus all costs incurred for these project purposes, commencing with initial project authorization, must be recovered from project beneficiaries.

      4. Heritage Assets. Heritage assets are property, plant and equipment (PP&E) that possess one or more of the following characteristics: 1) historical or natural significance, 2) cultural, educational or aesthetic value; or 3) significant architectural characteristics. The cost of heritage assets is not often relevant or determinable, and the useful life of heritage assets is generally not reasonably estimable for depreciation purposes. The most relevant information about heritage assets is their existence and condition. Therefore, heritage assets are reported in physical units rather than in monetary value.

        The cost of acquiring, improving, reconstructing, or renovating heritage assets, other than multi-use heritage assets, shall be recognized on the statement of net cost for the period in which the cost is incurred. The cost shall include all costs incurred during the period to bring the item to its current condition at its initial location.

        No amounts for heritage assets acquired through donation or devise (a will or clause or a will disposing of property) shall be recognized in the cost of heritage assets. The assets' fair value, if known and material, shall be disclosed in notes to the financial statements in the year received. If fair value is not known or reasonably estimable, information related to the type and quantity of heritage assets received shall be disclosed.

      5. Multi-Use Heritage Assets. Some assets may have both operating and heritage asset characteristics. A heritage asset for which predominant use is general Government operations is referred to as a multi-use heritage asset (e.g., the Main Interior Building which is predominantly used as office space). The cost of acquisition or reconstruction of all multi-use heritage assets meeting the capitalization threshold shall be capitalized as General PP&E and depreciated. Heritage assets having incidental use in general Government operations (e.g., a small amount of office space in an historic structure) are not referred to as "multi-use heritage assets." Rather, they are simply "heritage assets."

    2. Land & Land Rights. Land is the solid part of the surface of the earth. The treatment of land in financial records depends on whether it is General PP&E Land or Stewardship Land.

      1. General PP&E Land is land used in general operations, including land underlying schools, office buildings, research facilities, etc., provided that the land was not previously acquired by the Federal Government as part of the public domain and is not currently used in a stewardship capacity. The cost of General PP&E land is recognized in the financial records in the year that it is acquired. Land does not appreciate or depreciate.

      2. Stewardship Land is any land owned by the Federal Government and not acquired for or in connection with other General PP&E. Typical stewardship land is land held for its natural or cultural significance such as park land, wildlife refuge, etc. In addition, any land which came into government ownership as public domain land remains stewardship land regardless of how the land is used by Interior as the cost of this land is not identifiable. The overwhelming majority of Interior's land is Stewardship land. Stewardship land does not have an identifiable financial value and is not recognized in the financial statements.

      3. Mineral Rights, Natural Resources and the Outer Continental Shelf. Materials beneath the surface of the land (e.g., mineral deposits and petroleum), or above the surface of the land (e.g., renewable resources such as timber) and Outer Continental Shelf resources related to land are excluded from this policy.

      4. Land Rights are interests and privileges held by the entity in land owned by others, such as leaseholds, easements, water and water power rights, diversion rights, rights-of-way, and other land interests in land. Land rights are treated in the same manner as associated General PP&E land or stewardship land.

      5. Improvements to Land are permanent improvements to land used in operations, except for roads. Costs of improvements to land are treated in the same manner as General PP&E land or stewardship land.

    3. Construction-in-Progress (CIP). Construction-in-Progress includes costs incurred in the construction of real property for which the agency will be accountable, including direct labor, direct material, overhead and other costs incurred during construction. Upon completion, these costs will be transferred to the property capital asset account as the acquisition cost of the asset.

      1. Assets Constructed for Other Federal Agencies are normally recognized as CIP on the books of the entity that holds the title. In general, upon completion, the asset is transferred to the property records of the other bureau or agency. The most common situation is where one Interior bureau constructs an asset for another Interior bureau. In this case, the asset under construction is clearly CIP of the Department and should be recognized as such. In the case of assets built for Federal agencies outside Interior, the terms of the agreement must be reviewed. If the agreement creates a situation where the asset under construction can be considered "held for sale", then it may be necessary to reclassify the asset from CIP to Inventory. Bureau and Department financial personnel must be consulted to ensure appropriate accounting recognition.

      2. Assets Constructed for Non-Federal Agencies, including state, local and tribal governments, are also recognized as CIP on the books of the entity that holds the title. The exact nature of the accounting treatment will depend upon the details of the transaction.

      3. Construction in Abeyance is construction in progress that has been halted due to lack of funding or other reasons, and continues to be maintained (e.g., some BOR projects such as dams).

      4. Investigation and Development Costs incurred for general engineering studies and surveys that are expected to result in project construction are capitalized as part of the construction project. Investigation and development costs incurred prior to construction authorization or otherwise not related to a project currently under construction will be expensed in the period incurred. Once the engineering studies and surveys are complete and structural construction begins, these costs are transferred from investigations and development to CIP. Costs related to projects not reasonably expected to be pursued must be written off. Management must review the costs accumulated in investigations and development on a regular basis to ensure proper treatment.