Regarding residual value, SRC’s policy follows FAR 31.205 11, which requires recognition of residual value only when it exceeds ten percent of the asset’s capitalized cost. SRC’s policy and Disclosure Statement do not mandate a standard ten percent residual value, and historical disposals have not r...
Regarding residual value, SRC’s policy follows FAR 31.205 11, which requires recognition of residual value only when it exceeds ten percent of the asset’s capitalized cost. SRC’s policy and Disclosure Statement do not mandate a standard ten percent residual value, and historical disposals have not resulted in the recovery of salvage value. While the system default is currently set to zero percent residual value, SRC notes that the system allows adjustments when supported and therefore does not view the default setting alone as indicative of a deficiency. SRC is completing a multi year review of the existence and status of tangible assets, including validation of active and withdrawn assets. Results will inform any needed updates to the useful life matrix and related policies, and SRC continues to train employees to reinforce capital asset compliance. Key corrective actions completed to date include: • Updated and strengthened asset useful life practices, including revised policies, forms, matrices, and ongoing reviews of useful lives and fully depreciated assets. • Implemented enterprise wide controls for asset accountability, including periodic physical counts, disposals processing, and enhanced tracking in Costpoint. • Expanded and updated capital asset training and procedures, adding guidance on useful lives, residual value, active/inactive status, and tagging requirements. Remaining corrective actions, including reviews of related policies and procedures, will be completed by 9/30/2026. As part of our corrective action, SRC will periodically evaluate the results of its ongoing asset verification activities and make additional updates as needed. Contact Person Responsible for Corrective Action: Lisa Kennedy, Director, Corporate Controller Completion Date: Review of policy and procedures will be completed by September 30, 2026.