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Federal Arv:rrds <br />Infernal Control over h{ajor Programs. <br />. Sigp$cant fu,/iaiercies. lVe reported no deficiencies in the dmigr or op,a'ation of internal <br />control over major federal programs that te csosidff, to be signifimat defciencies. <br />e '\toterial Weabrxsx: We idenfifed no ftficiencies that u'e coruider to be rnaterial <br />weaknesses- <br />\&'e issued an uunodified opiniorn on the C'ouaty's compliance with requuenrents applicable to its <br />rujor fueral program. <br />We reparted na, flndingp tlrat are required to be disclased in accordaace rvith I {FR 200"516{a)"1 <br />Depreciation <br />Capital assets, which includes property, plant, equipment, and infrastructure assets, <br />(e.9., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental <br />or business{ype columns in the governmenlwide financial statements. Capital assets are <br />defined by the county as assets with an initial, individual cost of more than $5,000 and an <br />estimated useful life in excess of one year. Such assets are recorded at historical cost or <br />estimated historical cost if purchased or constructed. Donated capital assets are recorded at <br />estimated fair market value at the date of donation. Kittitas County has elected to use the <br />modified approach to account for the infrastructure account; Gravel Roads, which eliminates the <br />need to report depreciation expense. <br />Computer Software is reported as lntangible Assets with a capitalization limit of $5,000 <br />and is not depreciated. <br />Capital Leases are defined as long term debt to the county. The asset is tracked but <br />there is not value placed in the Capital Assets. Capital Leases are determined by one of the <br />following four criteria; 1) The lease transfers ownership of the property to the lessee by, or at, <br />the end of the lease term; 2) The lease contains an option to purchase the leased property at a <br />bargain price; 3) The lease is equal to or greater than 75% of the estimated economic life of the <br />leased property; 4) The present value of rental and other minimum lease payments, excluding <br />that portion representing executory costs to be paid by the lessor, equals or exceeds 90% of <br />the fair value of the lease property. <br />The cost of normal maintenance and repairs that do not add to the value of the asset or <br />materially extend assets lives are not capitalized. <br />Major outlays for capital assets and improvements are capitalized as projects are <br />constructed. lnterest incurred during the construction phase of the capital assets of business- <br />type activities is included as part of the capitalized value of the assets constructed. <br />Property, plant, and equipment of the primary government are depreciated using the <br />straight-line method over the following estimated useful lives: <br />3