Asset Management Financial Procedure
Section 1 - Overview
(1) The objectives of these procedures are to:
- Provide guidance on the definition of an asset and asset classes
- Clarify what costs are to be included when recognising an
Asset including bulk purchases and construction costs - Define useful life and provide a range of appropriate useful life ranges by asset class
- Define the responsibilities of all staff in asset management
- Set out the requirements for subsequent measurement and review of assets
- Outline the procedure for the acquisition, transfer and disposal of assets
Section 2 - Scope
(2) These procedures apply to the Asset Management Financial Rule.
Top of PageSection 3 - Procedures
Key features of an asset
(3) The key features in determining whether an
- Control — the University must have the power to obtain future economic benefits of the resource and restrict access to those benefits by others. Ownership of the resource will usually constitute control but is not essential.
- Past event — in most cases the past event will involve the purchase or construction of an asset but may also include transfer or donation of an asset from another entity.
- Future economic benefits — use of the asset will realise economic benefits in accordance with the University's objectives by generating sales, cost savings or other benefits. The benefits that flow to the University go beyond one year.
Asset classes
Asset class | Definition | Examples (not a definitive list) |
Land | Freehold land | Campus grounds, farmland |
Buildings | All Structural components of a property both internal and external of a purchased or constructed building | Education facilities, accommodation colleges, storage sheds |
Infrastructure | Long-life physical facility or structure essential to the operation of a network or system | Water and sewage supply systems, electricity or gas supply systems, lighting, roads, car parks, footpaths, cabling and communications, retaining walls. |
Plant and Equipment | Mechanical, electrical or technical in nature | Teaching, research or laboratory equipment, air conditioning units, security cameras, boats, multifunctional devices |
Computer equipment | Computer hardware | Servers, laptops, desktops, phone networks, AV equipment |
Motor Vehicles | Any self-propelled vehicle to transport across land, and include commercial or passenger vehicles | Cars, trucks, utilities, vans, motorcycles, ride-on mowers, tractors, trailers, forklifts, quad bikes |
Furniture and fittings | Moveable items with no permanent connection to the structure of the building or utility | Office furniture, partitioning, shelving, compactus, carpet |
Heritage and cultural assets | Any relic, work, building, place or landscape with architectural, archaeological, social , cultural, technical, scientific or natural heritage signature | Works of art, rare book, museum items |
Work in progress | Under construction, or in the process of being constructed, but yet to meet the recognition criteria of being in the location and condition necessary for it to be capable of operating in the manner intended by management | Building under construction, computer equipment yet to be installed, internally generated software under construction, purchased software |
Software purchased | Software predominately purchased from an external provider without material changes and is not an integral part of computer hardware. This does not include software licences | Call management software, expense management software |
Internally developed software | Software developed within the University or externally purchased software which has been materially changed | Custom developed software, purchased software highly customised as to differ greatly from the original software |
Other intangibles | Identifiable non-monetary asset with no physical substance | Water licence |
Asset acquisitions
(4) Acquisitions of
(5) For an
(6) All
(7) A business plan, including full costings, is to be prepared and approved prior to the acquisition of
(8) Equipment purchases above the recognition threshold and up to $50,000 do not require a business case but must be approved as part of the annual capital budget approved by Council, or by the Vice-Chancellor and Chief Executive Officer or Finance and Infrastructure Committee if outside the budget cycle in accordance with the Schedule of Financial Delegations Rule.
(9) All
(10)
(11) Finance are to be advised of any
(12) Finance will capitalise
(13)
(14)
Initial recognition of a non-current asset
(15) The value of
- For purchased
Assets — the price paid for theAsset and costs associated with getting theAsset into the location and condition ready for use; - For constructed
Assets — the costs to construct theAsset and costs associated with getting theAsset into the location and condition ready for use; - Market valuation or expert advice where a market exists for the
Asset ; and - Use of estimation of cost or value where data is available on similar
Assets .
(16) When an
- The cost to purchase the
Asset , including any duties or non-refundable taxes, less any discount or rebate; - Any other expenditure directly attributable in bringing the
Asset to the location or condition to be capable of operating in its intended manner; and - An estimate of costs to remove or dismantle the
Asset at the end of its useful life or remediation expenses where there is a present obligation to do so, e.g. a leasehold improvement which requires removal or restoration at the end of the lease.
(17) When an
(18) The following table provides guidance on how to treat expenditure on a purchased or constructed
(19) Similar or like-natured
- The following are examples of networks for which costs can be capitalised:
- Computer network — includes the operating system in the client and server machines, cabling connecting the machines to other supporting hardware such as bridges, routers and switches.
- Leasehold improvements — including wall construction, painting, cabling, carpeting, glazing, joinery, built-in desks, cabinets and work-stations.
- For a part replacement of a network, such acquisitions are to be capitalised, when and only when they extend the useful life or improve the original operating condition or performance of the existing network and the cost is material.
(20) Each part of a
- Land and buildings purchased together are to be recognised separately. Land has an indefinite useful life and is not depreciated and the building has a finite useful life and will be depreciated over time.
- Constructed buildings may be recognised as separate significant assets due to the different useful lives of components, e.g. computer networks, lifts, air-conditioning systems, security systems.
(21) An
- Computer hardware which comes with loaded software; and
- Security systems with such physical assets as cameras, computer and alarms and an intangible asset of software to run the system.
(22) On recognition of a
- Factors to consider when determining the useful life of an
Asset are:- the expected usage of the
Asset - the expected wear and tear on the
Asset - technical or commercial obsolescence
- legal or similar limits on the use of the
Asset , e.g. compulsory replacement due to safety reasons - past experience of the use of similar
Assets - planned replacement in the strategic asset management plan
- the expected usage of the
- If more than one factor above is considered and different useful lives are arrived at, the shortest useful life is to be used.
(23) Any initial expenditure relating to an
Expenditure subsequent to initial purchase or construction
(24) Expenditure for operating or maintenance of
- costs of repairs due to wear and tear
- any expenditure which restores an asset to its original functionality
- minor parts and consumables, and
- costs to prevent deterioration or service interruption of the
Asset .
(25) Any expenditure which improves the original operating condition or performance of an
- The following are examples of expenditure incurred subsequent to the initial purchase of an
Asset which may be capitalised:- refurbishments of an area with new paint, carpet, floor tiles, and/or in-built furniture which improves the overall effectiveness or output of the area
- new landscaping works in a previously un-landscaped area that improves the functional use of the area, and
- a major upgrade of audio visual equipment.
(26) A major overhaul or refurbishment of an
(27) When an
Security of assets
(28) All staff are responsible for the security, care and protection of University
(29) The safeguard of equipment such as laptops, tablets, mobile phones and cameras is particularly important due to the confidential information they may contain. Steps must be taken to limit the risk of loss or theft, for example, not leaving these items unattended in public places or in motor vehicles.
(30) Each Head of School or Director is responsible for the security and care of all assets in their custody or their staff's custody.
Depreciation and Amortisation
(31)
(32) All
(33) The depreciable amount is expensed to the Statement of Comprehensive Income on a monthly basis in equal amounts until the cost or value of the
(34)
(35) The following
- land, as it has an infinite life
- heritage and cultural assets, as they have an infinite life, and
- work in progress, as the asset is not yet in use or held ready for use.
(36) The
Asset class | Useful life | Depreciation/amortisation rates per annum |
---|---|---|
Buildings | 3 to 60 years | 1.67% to 33.33% |
Infrastructure | 10 to 60 years | 1.67% to 10.00% |
Plant & equipment | 5 to 15 years | 6.67% to 20.00% |
Computer equipment | 3 to 15 years | 6.67% to 33.33% |
Motor vehicles | 5 years | 20.00% |
Furniture & fittings | 7 to 20 years | 5.00% to 14.29% |
Software purchased | 5 to 15 years | 6.67% to 20.00% |
Internally developed software | 10 years | 10.00% |
(37) A review of
Stocktakes
(38) All
(39) The stocktake process is:
- A list of
Assets from the asset register is sent to the custodian department from Finance along with instructions including timings of the stocktake and the documentation to be returned. - The performance of the stocktake is to be undertaken by 2 persons (verifying officers), one of whom must be from the custodian department and one from Finance.
- A physical inspection of all
Assets is to be performed and matched to the list given. AllAssets are to be accounted for and the sighting or non-sighting recorded on the Asset Verification Report. - Any intangible
Assets listed must be assessed to verify they are still in use and, for software, in accordance with the terms and conditions of the licence. - Any discrepancies between the listing of
Assets and the physical inspection are to be investigated thoroughly to ascertain the reason for the discrepancy. All discrepancies are to be documented on the Asset Verification Report including the reason for the discrepancy. - Discrepancies are to be treated as follows:
Assets not sighted:- Believed to have been disposed of by way of sale, obsolescence or destroyed, are to be derecognised.
- Due to suspected theft or misconduct are to be reported to University security and, where appropriate, the NSW Police immediately. The University Insurance Officer also needs to be advised for a possible insurance claim. The asset is to be derecognised.
- Believed to have been transferred within UNE are to be updated in the asset register with the correct location and custodian
Assets sighted:- But not listed are to be communicated to Finance to ascertain if they are to be included on the asset management system
- But are no longer in use due to obsolescence are to be disposed of and derecognised
- But are no longer in use due to being held for sale are to remain on the register until sold and no further
Depreciation is to be processed.
- Any
Assets to be derecognised will have an Asset Disposal Form completed. See the section on Disposal of Assets below. - During the annual stocktake, in addition to verifying the existence of assets, all assets are to be assessed for:
- Impairment - see section Impairment below.
- Remaining useful life and residual value — see section Assessment of useful lives and residual value below.
-
Any impairments of amendments are to be recorded on the Asset Verification Report.
-
- The recorded details of
Assets needs to be reviewed for accuracy and any amendments included on the Asset Verification Report. These details will be updated in the asset register by Finance. - The completed Asset Verification Report is to be signed by the verifying officers as true and correct, and returned to Finance by the due date stipulated in the stocktake instructions.
- Finance will ensure all information from the Asset Verification Report is updated in the asset register and a final listing sent out to all custodian departments for final verification. This final verification listing is approved by the Head of School or Director of the custodian department as true and correct and returned to Finance by the due date stipulated in the stocktake instructions.
- A final report detailing the results of the stock take for the University will be compiled by Finance and approved by the Deputy Chief Financial Officer.
Impairment
(40) All non-current assets, including work in progress, with a written down value greater than $5,000 are to be reviewed at least annually for impairment during the annual stocktake. When reviewing assets for impairment the asset needs to be assessed for indicators of impairment that would materially reduce the assets recoverable amount. The following are examples of impairment factors:
- An observable indication the assets condition or service potential has declined at a faster rate than expected
- Significant changes in the technological, market, legal or economic environment in which the University operates which has, or will have in the near future, an adverse effect on the University, or
- Any evidence of obsolescence or physical damage to the asset.
(41) If a custodian department is aware of impairment to a non-current asset during the financial year, they must advise Finance as soon as possible.
(42) The following are examples of impairment:
- A building is no longer utilised, as the course for which the building was used for, is no longer offered by the University
- Research equipment no longer used, or rarely used, as newer equipment embodying more advanced technology is in use
- Safety regulations have forced the closure of a building
- The asset is no longer used as it does not meet the environment standards required
- Computer hardware obsolete due to technology advancement
- Software which is no longer supported by an external party or internal resources
- Roadway is sagging indicating it will need to be replaced earlier than anticipated, i.e. before the end of the useful life, and
- Expenditure for a project funded by way of external funds in work in progress has now had the funding withdrawn.
(43) Impairment to
(44) Finance will update the asset register for any impairment identified.
(45) In accounting for
(46) If a revalued asset is subsequently written down due to impairment, the loss is first written off against any balance available in the revaluation surplus for that
(47) For impaired assets, any future
Valuation
(48) Regular valuations, at least once every 3 years, will be performed for the following asset classes to ensure the carrying amount of the assets reflect their
- Land
- Buildings
- Infrastructure
- Intangibles (only where an active market exists)
(49) Asset classes measured at cost are never to be revalued, even if fully depreciated. Useful lives are to be reviewed each year to ensure they are not fully depreciated whilst they still have service potential.
(50) Independent valuations are to be carried out by a suitably qualified person. All
(51) If indicators exist that the asset class has experienced changes of +/-20% in carrying amounts since the last valuation, an independent valuation is to be undertaken even if it is before the next valuation is due.
(52) When engaging an independent valuer, the Procurement Policy and Schedule of Financial Delegation Rule must be adhered to.
(53) The Deputy Chief Financial Officer is to engage a professional qualified valuer taking into account the expertise required for the asset classes and location of the
(54) Instructions to the valuers must be in writing by way of a letter or contract for services and must include:
- The purpose of the valuation, e.g. disclosure
- The classes of the
Assets to be valued - The location of the
Assets to be valued
(55) The valuer should provide confirmation of acceptance of the engagement in writing of the terms on which they will be acting. This correspondence should include information on their fees, timing of payments and expense reimbursement arrangements.
(56)
- The identifying details of assets to be valued including
- Location
- Age
- Current valuation (or cost, as applicable)
- Physical attributes, and
- Current use
- Any legislative, contractual or other restrictions and details, e.g. heritage listings
- Details of any recent maintenance
- Details of any assets acquired during the financial year and amounts currently in work in progress
(57) The Deputy Chief Financial Officer is responsible for ensuring the valuation information returned from the valuers is a true and fair view. The information required from the valuer should include:
- The effective date of the valuation
- Statement on compliance with relevant accounting standards
- Any assumptions used
- Valuation technique used
- Data inputs used and their sources
- If unobservable data is used, the rationale for doing so and sensitivity analysis, and
- Reasons for any material changes in value for an asset or asset class.
(58) Prior to the end of the financial year, each asset class not subject to an independent valuation in that year will be reviewed internally to ensure the
(59) Land and Building asset classes are to be revalued at the individual asset level. Infrastructure
(60) In accounting for revaluations, any accumulated
- First time revaluations
- Increments are to be recorded as an increase to the asset and an increase to the revaluation surplus.
- Decrements are to be recorded as loss on revaluation (expensed) and a decrease to the asset.
- Subsequent revaluations
- Increments are to be recorded as an increase to the asset and an increase to the revaluation surplus.
- Decrements are to be recorded as a decrease in the revaluation surplus and a decrease to the asset. Any decrement above the previous revaluation increment is to be recorded as a loss on revaluation (expensed)
(61) For revalued
Assessment of useful lives and residual value
(62) The useful life and
(63) The remaining useful life of the
(64) The
(65) Any changes to the useful life or
(66) Adjustments to the useful life are to be made in the earliest year in which a change is deemed necessary. Delays will result in inaccurate
Transfer of assets
(67) A transfer of an
(68) Any transfers are to occur at the carrying amount of the
(69) The
(70) Finance is to verify the movement with the receiving
Disposal of non-current assets
(71)
- They have been disposed, for example:
- Sold by way of auction, trade-in or tender
- Lost, stolen, or not found at stocktake
- No future economic benefits are expected from its use, for example:
- Scrapped due to obsolescence or physical damage
- Used for spare parts
(72)
(73) Before the disposal of computers or computer equipment, all University information and licenced software (including the operating system) must be removed. All traces of ownership by the University must be removed, including identification and asset labels or tags and engravings that may identify UNE as the original owner. Consult with the Technology and Digital Services for information on how to dispose of information technology equipment.
(74) Motor vehicles are to be disposed of by sale to a motor dealer or by way of auction after receiving quotes for a selling price. To ensure a fair price is being quoted, reference is to be made to appropriate websites detailing current market value, for example www.redbook.com.au.
(75) When an
(76) When an
(77) Any material costs incurred in selling the
(78) When an
(79) An Asset Disposal Authority form is to be completed for all
(80) The carrying amount (written down value) of the asset is used to determine who has the delegation authority to approve the asset disposal.
(81) For the physical disposal of
Portable and attractive assets
(82)
(83) Portable and attractive items are non-consumable items which are susceptible to theft or loss due to their nature and attractiveness for personal use or resale. Only items above $300 in value and deemed to be portable and attractive are to be recorded. Examples of portable and attractive times are:
- Laptops
- Tablets
- Mobile Phones
- Cameras
- Projectors
(84) Each
(85) The Head of School or Director is to ensure adequate controls are in place to safeguard portable and attractive
(86) The register must be updated whenever a portable and attractive item is acquired, transferred to another user or disposed of.
(87) Items on the portable and attractive register are to be disposed of in accordance with this procedure (see the section Disposal of Assets) with the exception of the following:
- The Asset Disposal Form must be approved by the Head of School or Director and filed within the School or Directorate responsible and retained for audit purposes
- As these
Assets are fully expensed when acquired, no further accounting entries are required.
(88) Each
(89) The process for undertaking the stocktake is:
- The stocktake can be performed by one person but this person cannot be the person responsible for maintaining the register
- A physical inspection of all items is to be performed and matched to the register. All items are to be accounted for.
- Each item on the register is to be marked sighted or not sighted.
- All discrepancies are to be investigated to ascertain the reason for the discrepancy and documented for audit purposes, including Asset Disposal Authority forms to be completed for those believed to have been disposed of.
- The Portable and Attractive Register is to be updated for any discrepancies.
(90) Finance will undertake periodical reviews of Portable and Attractive registers and stocktakes. All documentation requested by Finance must be provided in accordance with the instructions of the Asset Officer, Finance.
Summary of roles and responsibilities
(91) All managers are responsible for:
- Ensuring the acquisition of
Assets is within approved budget (capital and/or operational) - Adherence to the Procurement Policy and Schedule of Financial Delegations Rule
- Security and care of all
Assets in their custody and their staff's custody - Consulting with Finance to ensure items are categorised as capital or operational expenditure during the planning stage of an
Asset acquisition - Maintenance of the locally-held Portable and Attractive Register
- Stocktake of
Assets on both the asset and Portable and Attractive Registers within the timeframes required - Documentation surrounding
Assets and the maintenance of registers - Advising of any
Asset movements - Completion and submission of required forms on a timely basis, e.g. asset disposal forms, and
- Disposing of physical
Assets with assistance from Technology and Digital Services or Estate and Built Environment
(92) Finance are responsible for:
- Maintaining the Asset Register
- Ensuring
Assets are capitalised in accordance with Australian Accounting Standards, Treasury guidelines and legislation - Coordinate annual stocktakes and reporting on stocktake results
- Reconciling the Asset Register with the General Ledger on a monthly basis
- Reconciling work-in-progress on a monthly basis
- Running of monthly
Depreciation /Amortisation - Advising
Schools and Directorates on the application of this procedure - Review of Portable and Attractive Registers
- Verifying and recording
Asset transfers - Ensuring all
Asset transactions are in accordance with the Schedule of Financial Delegations Rule - Provide management reports on
Assets as required - Review
Depreciation /Amortisation rates and ranges at least annually - Ensure accurate recording and reporting of
Assets in the financial statements and provide evidence to support the reports, and - Ensure
Assets are revalued when required and engage qualified valuers to undertake the valuations.
Authority and Compliance
(93) The Deputy Chief Financial Officer, pursuant to the University's Asset Management Financial Rule, makes these procedures.
(94)
(95) These procedures operate as and from the
Section 4 - Definitions
(96) For the purposes of this Procedure the following definitions will apply:
- Portable and attractive - non-consumable items which are susceptible to loss or theft due to their nature and attractiveness for personal use or resale.
- Recoverable amount — the higher of an asset's fair value less costs to sell, and its value in use.
- Useful life — the period over which the asset is expected to be available for use.