Asset Management & Accounting Policy

Wudinna District Council Policy Manual

Asset Management & Accounting Policy

Version No: 2.1

Issued: 16 October 2006

Last Review: May 2018

Next Review: May 2020

GDS20 Category Governance

The electronic version on the internet is the controlled version. Printed copies are considered uncontrolled.

Before using a printed copy, verify that it is the current version.

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Name of Council Wudinna District Council

File reference 9.63

Responsibility: Governance

Minutes reference: 10.1.2 - May 2018

Next review date: Council will endeavour to review this policy every 2 years

Applicable Legislation: Local Government Act 1999 Local Government (General) Regulations 1999 Local Government (Financial Management) Regulations 2011

Related Plans & Policies:

Infrastructure & Asset Management Plan Risk Management Policy & Risk Assessment Framework Risk Management Plans Asset Capital Renewal & Maintenance Plans Long Term Financial Plan Annual Financial Budget Community Plan Corporate Action Plan Community Water Schemes Policy Prudential Management Policy

Related References & Procedures:

International Infrastructure Maintenance Manual V 4.0 2011 (IIMM) Australian Financial Management Guidelines V1.3 2012 International Financial Reporting Standards (IFRS) South Australian Model Financial Statements Accounting Standard – AASB116 – Property Plant and Equipment Accounting Standard – AASB136 – Impairment of Assets Accounting Standard – AASB13 – Fair Value Measurement Accounting Standard – AASB108 – Accounting Policies, Changes in Estimates &Errors Accounting Standard – AASB1051 – Land Under Roads Various LGA Information Papers

INDEX

Clause Title Page

1 Purpose 2

2 Scope 2

3 Principles 2

4 Classification 3

5 Management of Assets 3

6 Acquisition of Assets 3

7 Recognition 4

8 Asset Values 4

9 Capitalisation 4

10 Depreciation 5

11 Revaluation 5

12 Impairment 6

13 Disposal of Assets 7



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14 Write-Off 7

15 Physical Inspection and Safe Keeping 7

16 Insurance 7

17 Accounting for Land Under Roads 7

18 Reporting 8

19 Definitions 8

20 Responsibilities 9

21 Availability of Policy 9

APPENDIX 1 Asset Classification, Capitalisation & Depreciation Table 10

APPENDIX 2 Classifying Operating / Capital Expenditure (Decision Tree) 14

1 PURPOSE

This policy provides guidance in complying with legislation which requires Council to account for and report fixed capital assets in Council’s financial statements and to set guidelines for implementing consistent asset management and accounting processes throughout Wudinna District Council and in line with its strategic objectives.

The guidance aims to provide information about fixed capital assets allowing Council to gain a better understanding of the value and cost of using such assets, which enables better planning and decision making regarding capital asset acquisition, management and disposal. 2 SCOPE

This policy applies to all infrastructure assets that are owned by Council and assets that are under the care, control and management of Council.

The accounting policies of Council must comply with Australian Accounting Standards which include Australian equivalents of International Financial Reporting Standards (AIFRS) and “Australian Specific Standards”. 3 PRINCIPLES

Council is committed to implementing a systematic Asset Management strategy in order to apply appropriate Asset Management practices across all areas of Council.

This includes ensuring that assets are planned, created, operated, maintained, renewed and disposed of in accordance with Council’s priorities for service delivery (as amended from time to time) in the most sustainable (including cost effective) manner for present and future generations.

Assets are properly managed and maintained through:

• The development, implementation and review of Asset Management Plans

• Ongoing development of information systems for data capture, asset maintenance programming, asset lifecycle forecasting and financial reporting.

Programs are implemented and maintained to monitor the condition and performance of existing assets in meeting required service levels and establishing renewal priorities; recognising that assets are not always renewed – acquiring more assets is not necessarily the solution to increased service demand.

Continuous review and improvement of Asset Management Plans and Long Term Financial Plans must be conducted in line with Council’s strategic plans.



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4 CLASSIFICATION

Councils Assets are classified into the following categories:

• Plant & Equipment ⚫ Property

• Roads ⚫ Stormwater

• Town Infrastructure ⚫ CWMS (STEDS)

• Street Furniture In accordance with “Asset Classification, Capitalisation & Depreciation” Table – Appendix 1

5 MANAGEMENT OF ASSETS

In accordance with Section 122 of the Local Government Act 1999, Council is required to have in place a consistent Asset Management Strategy enacted through the existence of regularly reviewed Infrastructure & Asset Management Plan(s).

The following strategies will be adopted to assist in meeting policy principles:

• Assets will be identified, categorised (as above) and recorded to Asset Registers.

• Strategic outcomes to be achieved and the levels of service required to achieve those outcomes (recognising service levels) defined.

• A cross-functional Asset Management Strategy which can be enacted across all Council operations and departments by all employees adopted.

• Further develop the information systems required to effectively capture, maintain and manage assets and infrastructure data.

• An inspection regime will be used as part of asset management to ensure agreed service levels are maintained to identify asset renewal priorities.

• Future lifecycle costs will be reported and considered in all decisions relating to new services and assets and upgrading of existing services and assets (refer to Prudential Management Policy).

• Participate in on-going consultation with the community. As a minimum, Council will adopt the following consultation processes: o Local/regional community surveys; o Analysis of the Customer Action Request database; o Monthly reporting via “The Granite” community newsletter; o Publication of an Annual Report.

• Adopt 10 year Asset Management Plans describing the lifecycle management strategies for each of the asset categories (refer to Clause 4).

• Systematic and cyclical reviews will be applied to all asset classes to ensure that the assets are managed, valued and depreciated in accordance with applicable Australian standards.

• Recognise depreciation/asset consumption as current costs of maintaining assets.

• Adopt Long Term Financial Plans spanning 10 years.

6 ACQUISITION

6.1 Council’s Capital Assets may be acquired by purchase, construction, donation or received free of charge (as in the case of infrastructure assets received from developers in new land divisions).

6.2 In all cases of acquisition by purchase or construction, the requirements of Council’s Procurement Policy must be followed.

6.3 Assets constructed by Council will include, where relevant, an appropriate internal allocation amount to represent indirect labour overheads and the use of Council’s internal plant & machinery on the job. Labour overheads to be based on outdoor labour hours worked and plant & machinery allocation to be based on usage.

6.4 Assets are to be added to the appropriate Asset Register.



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7 RECOGNITION

7.1 The cost of an item of property, plant and equipment shall be recognised as an asset if, and only if:

a. It is probable that future economic benefits associated with the item will flow to the entity; and

b. The cost of the item can be measured reliably.

7.2 All assets are initially recognised at cost. For assets acquired at no cost or for nominal consideration, cost is determined as fair value at the date of acquisition.

7.3 All non-current assets purchased or constructed are capitalised as the expenditure is incurred and depreciated as soon as the asset is held “ready for use”. Cost is determined as the fair value of the assets given as consideration plus costs incidental to the acquisition, including architects fees and engineering design fees and all other costs incurred. The cost of non-current assets constructed by the Council includes the cost of all materials used in construction, direct labour on the project and an appropriate proportion of variable and fixed overhead.

7.4 Community buildings, structures and associated assets (on Council owned land or crown land that is under the care and control of Council) that are managed under executed land only lease agreements will not be valued in Councils Asset Register and therefore will not be depreciated.

Council will only recognise these assets in the event of expiration/termination of the lease and the abandonment of the building and associated assets, unless the lease agreement specifies otherwise. In the event of a loss, it is recognised that Council may not necessarily replace the building and associated assets. Council may still conduct insurance valuations as per terms of lease agreements currently in place.

8 ASSET VALUES

8.1 The accounting standards require a value in use calculation. 8.2 Where the future economic benefits of an asset for Council are not primarily dependent on the asset’s

ability to generate net cash inflows and where the Council would, if deprived of the asset, replace its remaining future economic benefits, fair value shall be determined as the depreciated replacement cost of the asset.

8.3 For any assets on Councils Asset Register that wouldn’t be replaced the fair value is an estimate of the likely cash flow from disposal.

8.4 Depreciated replacement cost is defined as the current replacement cost of an asset less, where applicable, accumulated depreciation calculated on the basis of such cost to reflect the already consumed or expired future economic benefits of the asset. The current replacement cost of an asset is its cost measured by reference to the lowest cost at which the gross future economic benefits of that asset could currently obtain in the normal course of business.

9 CAPITALISATION

9.1 Capital expenditure threshold limits are defined in Appendix 1 “Asset Classification, Capitalisation & Depreciation” Table. All expenditure on assets not meeting the threshold requirements will be treated as maintenance and expensed to Councils Income Statement in the period in which it is incurred (also refer to Appendix 2 “Classifying Operating/Capital Expenditure (Decision Tree)”.

9.2 Assets with a useful life in excess of one year are only capitalised where the cost of acquisition exceeds materiality thresholds established by Council for each type of asset. In determining (and in annually reviewing) such thresholds, regard is had to the nature of the asset and its estimated useful life.

9.3 Materiality levels are set so as not to misstate Financial Statements and to provide a guide as to whether it is practical from an administrative perspective that expenditure is capitalised.

9.4 Intergenerational equity is maintained whereby the expense of capital acquisitions is spread over their useful life through the mechanism of depreciation, so those who have the benefit of the assets can be charged through rates or fees and charges for their use.



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10 DEPRECIATION

10.1 Other than land, all infrastructure - property, plant and equipment assets recognised are systematically depreciated over their useful lives on a straight-line basis which, in the opinion of Council, best reflects the consumption of the service potential of the assets. Depreciation periods for infrastructure assets have been estimated based on the best information available to Council as detailed in “Asset Classification, Capitalisation & Depreciation” Table.

10.2 Depreciation methods, useful lives and residual values of classes of assets shall be reviewed at the end of each annual reporting period and, if there has been any significant change in the expected pattern of consumption of the future economic benefits embodied in the asset, the life or method shall be changed to reflect the changed pattern. Such a change shall be accounted for as a change in an accounting estimate in accordance with AASB 108.

10.3 Specific Assets will be recognised at the ‘Component’ level as defined in “Asset Classification, Capitalisation & Depreciation” Table. This is the part that is replaced or retired at the end of its useful life.

10.4 Components of property may be identified using a two test method: a. Those parts that require replacement at regular intervals (i.e. have different useful life); and b. Those parts that have a cost that is significant in relation to the cost of the whole item.

10.5 A rate of depreciation is to be applied to constructed streets and roads so that the Written Down Value (WDV) represents the ‘useful life’ of the street or road.

10.6 Consumption based depreciation is a method based on measuring the level of the assets remaining service potential. This method may be described as a sophisticated version of straight line depreciation. Instead of calculating depreciation in equal components from the asset acquisition value to the residual value, depreciation is calculated with reference to stages in an assets useful life. Hence this method consists of a series of straight line depreciation calculations reflecting the degradation of the underlying assets condition.

10.7 The total depreciation expense, over the life of an individual asset is the same for both straight line depreciation and the consumption based depreciation methods. It is the annual depreciation expenses that is attributed in a given year that generally differs, viz straight line method results in a consistent depreciation charge across the useful life of the asset; the life that it provides the service to the community, whereas consumption based depreciation results in a lower annual depreciation expense in the early years of the assets life and a higher annual depreciation expense in the later years of the assets useful life.

10.8 Hence, straight line depreciation is considered the most appropriate measure for calculating depreciation, as it reflects the pattern in which the assets future economic benefits (the service provided) are expected to be consumed.

10.9 The useful life of specific assets and therefore the depreciation rate may be varied within the range depending on the nature of the asset, asset quality, environmental and/or operational conditions.

11 REVALUATION

11.1 Pursuant to the Australian Accounting Standard (AASB) asset revaluations must be made with sufficient regularity to ensure that the carrying amount of each asset class does not differ materially from its fair value at the reporting date.

11.2 All assets will be revalued at their fair value, which is defined in AASB13.

11.3 After recognition as an asset, an item of property, plant and equipment whose fair value can be measured reliably shall be carried at a revalued amount, being its fair value at the date of the revaluation less any subsequent accumulated depreciation and subsequent impairment losses. Revaluation shall be made with sufficient regularity to ensure that the carrying amount does not differ materially from that which would be determined using fair value at the reporting date.



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11.4 For infrastructure and other asset classes where no active market exists, fair value is determined to be the current replacement cost of an asset less, where applicable, accumulated depreciation calculated on the basis of such cost to reflect the already consumed or expired future economic benefits of the asset.

11.5 Depreciated replacement cost will be the basis of valuation of structures on Community Land. Structures erected or constructed on non-community land that have a market value will however need to be valued using a market based approach.

11.6 If the carrying amount of a class of assets is increased as a result of a revaluation, the net revaluation increase shall be credited directly to equity under the heading of revaluation reserve. However, the net revaluation increase shall be recognised in the Income Statement to the extent that it reverses a net revaluation decrease of the same class of assets previously recognised in the Income Statement.

11.7 Revaluation increases and revaluation decreases relating to individual assets within a class of property, plant and equipment shall be offset against one another within that class but shall not be offset in respect of assets in different classes.

11.8 Comprehensive revaluations of assets will be carried out at least every 5 years for all assets and will be independently revalued where required, including the use of industry unit costs where relevant and available.

11.9 More frequent revaluations will be undertaken (via an indexation rate equivalent to the annual movement in the Local Government Cost Index or, in the case of land, annual movements in property valuations) in the instances where there is a material movement in the fair value of a class of fixed capital assets.

12 IMPAIRMENT

12.1 An assessment of asset impairment will be undertaken on an annual basis as at the reporting date (30th June) in accordance with the Standard. In assessing whether there is any indication that an asset may be impaired, an entity shall consider, as a minimum, the following indications:

a. External sources of information Information that may indicate significant adverse changes have taken place during the period, or will take place in the near future, in the technological, market, economic or legal environment in which the Council operates.

b. Internal sources of information i. Evidence of obsolescence or physical damage of an asset. ii. Significant adverse changes have taken place during the period, or are expected to take place in

the near future, in the extent to which, or manner in which, an asset is used or is expected to be used. These changes include the asset no longer being of benefit to the community, plans to replace or dispose of an asset before the previously expected date, and reassessing the useful life of an asset as finite rather than indefinite.

iii. Evidence from internal reporting that indicates that an asset may be impaired includes additional funding required to renew, operate or maintain it that are significantly higher than that originally budgeted.

iv. If there is an indication that an asset may be impaired, this may mean that the remaining useful life, the depreciation (amortisation) method or the residual value for the asset needs to be reviewed and adjusted in accordance with the Accounting Standard applicable to the asset, even if no impairment loss is recognised for the asset.

12.2 Assets that have an indefinite useful life are not subject to depreciation and are reviewed annually for impairment.

12.3 An asset is impaired if its carrying amount exceeds the amount to be recovered through the use or sale of the asset. In such instances, the asset is described as impaired and AASB136 requires the Council to recognise impairment loss.



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12.4 Assets that are subject to depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.

12.5 An impairment loss on a non-revalued asset is recognised as an impairment loss in the Statement of Comprehensive Income. An impairment loss on a revalued asset is recognised directly against any revaluation reserve for the asset to the extent that the impairment loss does not exceed the amount in the revaluation reserve for the same asset. Any excess is recognised as an expense.

13 DISPOSAL OF ASSETS

13.1 An asset will be depreciated to date of disposal to determine residual. 13.2 Accumulated depreciation and cost of the asset are written back in the General Ledger and removed

from the relevant Asset Register. 13.3 Profit/Loss on disposal are calculated. This calculation should be prepared or authorised by a senior

responsible Officer. 13.4 Specific assets within the recognised asset classifications will be identified for non-replacement and/or

partial replacement subject to consultation with the community.

14 WRITE OFF

An asset is written-off when:

• The asset is obsolete and/or beyond economical repair and/or retains no further service potential and cannot be sold.

• A physical stocktake fails to locate the asset.

• The asset is known to have been stolen.

• The asset has been demolished.

15 PHYSICAL INSPECTION AND SAFE KEEPING

15.1 Any staff member that has a responsibility to program, instigate or oversee work that results in the creation, upgrade, renewal, receipt (gifted or otherwise) or disposal of assets that are owned or held in the care and control of Council, at the completion of each specific assets activity must collect all required asset information and ensure that all asset information is given to the appropriate person for entry into the relevant Council system(s).

15.2 No less than once in every financial year a physical Stocktake of Plant & Equipment will be undertaken to reconcile with the Register to ensure that assets continue to be appropriately accounted for.

15.3 No less than once in every financial year a physical Stocktake of Furniture & Equipment will be undertaken to reconcile with the Register to ensure that assets continue to be appropriately accounted for.

16 INSURANCE

16.1 Council will ensure that its fixed capital assets are appropriately insured. 16.2 The Finance Manager and Office Manager will ensure that asset acquisitions and disposals are accurately

accounted for in Council’s asset insurance schedule. 16.3 The Office Manager in liaison with the Finance Manager is responsible for negotiating appropriate asset

insurance values with Council’s insurers.

17 ACCOUNTING FOR LAND UNDER ROADS

17.1 Pursuant to clause 8 of AASB1051, Council is of the opinion that it is not possible to attribute a value sufficiently reliable for these assets to qualify for recognition and accordingly land under road has not been recognised.

17.2 Land acquired for road purposes during the year is initially recognised at cost, but transferred to fair value at reporting date, effectively writing off the expenditure.



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18 REPORTING

18.1 Annual Financial Statements The audited annual financial statement that are prepared in accordance with Australian equivalents to International Financial Reporting Standards (AIFRS) as they apply to non-for-profit entities and relevant South Australian legislation.

18.2 Annual Review Each year a report is to be presented to the Audit Committee which considers asset impairment and assets that may no longer have an economic benefit to Council thereby changing their value in use calculation.

19 DEFINITIONS

Asset Management The combination of management, financial, economic, engineering and other practices applied to physical assets, with the objective of providing the required level of service in the most cost-effective manner.

Asset Management Strategy

A strategy for asset management covering the development and implementation of plans and programmes for asset creation, operation, maintenance, rehabilitation / replacement, disposal and performance monitoring to ensure that the desired levels of service and other operations objectives are achieved at optimum cost.

Asset Management Plan A plan developed for the management of one or more infrastructure assets that combines multi-disciplinary management techniques (including technical and financial) over the lifecycle of the asset in the most cost effective manner to provide a specified level of service.

Asset A resource controlled by the Council as a result of past events and from which future economic benefits are expected to flow to the Council and has an economic life of greater than 12 months and enable services to be provided.

Carrying amount The amount at which an asset is recognised in the balance sheet after deducting any accumulated depreciation / amortisation and accumulated impairment losses.

Condition monitoring Continuous or periodic inspection, assessment, measurement and interpretation of the resultant data to indicate the condition of a specific component so as to determine the need for some preventative or remedial action.

Component (of an asset) Specific parts of an asset having independent physical or functional identity and having specific attributes such as different life expectancy, maintenance regimes, risk or criticality.

Depreciable amount The cost of an asset or other amount substituted for its cost, less its residual value.

Depreciation/amortisation The systematic allocation of the depreciable amount of an asset over its useful life.

Fair Value The amount for which an asset could be exchanged or a liability settled between knowledgeable, willing parties in an arm’s length transaction.

Impairment loss The amount by which the carrying amount of an asset exceeds its recoverable amount.

Infrastructure Assets Physical assets that contribute to meeting the needs of organisations or the need for access to major economic and social facilities and services e.g. Roads, drainage, footpaths and cycle ways. These are typically large interconnected networks or portfolios of composite assets. The components of these assets may be separately maintained, renewed or replaced individually so that the required level and standard of service from the network of assets is continuously sustained. Generally the components and hence the assets have long lives. They are fixed in place and are often have not separate market value.



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Level of Service The defined service quality for a particular service / activity against which service performance may be measured. Service levels usually relate to quality, quantity, reliability, responsiveness, environmental acceptability and costs.

Life Cycle Cost The total cost of an asset throughout its life including planning, design, construction, acquisition, operation, maintenance, rehabilitation and disposal costs.

Non-current Asset All other assets other than current assets, including assets held but not traded by a business in order to carry out its activities. Such assets are intended for use, not exchange and normally include physical resources such as land, buildings, drains, parks, water supply and sewerage systems, furniture & fittings.

Residual value The estimated amount that an entity would currently obtain from disposal of the asset after deducting the estimated costs of disposal, if the asset were already of the age and in the condition expected at the end of its useful life.

Useful Life The expected time between placing the asset into service and removing it from service or the estimated period of time over which the future economic benefits embodied in a depreciable asset are expected to be consumed.

20 RESPONSIBILITIES

Elected members are responsible for:

• adopting the Asset Management & Accounting Policy and Asset Management Plans (as developed).

Chief Executive Officer will:

• ensure than an Asset Management Strategy is developed

• ensure that Asset Management Plans and Long Term Financial Plans meet legislative requirements, under the Act

• ensure that sufficient resources are available to manage assets

• report on the status and effectiveness of asset management within Council.

21 AVAILABILITY OF POLICY

This Policy will be available for inspection at Council’s principal office during ordinary business hours and on the Council’s website www.wudinna.sa.gov.au Copies will also be provided to interested members of the community upon request and upon payment of a fee in accordance with Council’s Schedule of Fees and Charges.

http://www.wudinna.sa.gov.au/


Asset Accounting & Management Policy

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APPENDIX 1 – Asset Classification, Capitalisation & Depreciation Table

Asset Class Asset Groups / Types within Class

Type Useful Life

Range (years)

Determining Factor Capital Maintenance

Roads

Sealed Non Built Up (SNBU) Rural Sealed Surface 20 Road hierarchy & construction type & Level of usage

All resealing

Any new assets acquired (e.g. from land developments)

Patching that constitutes less than a segment of road.

Line marking

Rural Sealed Pavement 100

Formed Non Built Up (FNBU) Rural Sheeted Surface 10-30 Road hierarchy & construction type & Level of usage

All re sheeting & rip & reform Grading

Shoulder clearing & spraying

Rural Formed Graded Surface

0 Grading

Unformed Non Built Up (UFNBU)

Rural Unformed & Road Reserves

0 NA

Sealed Built Up (SBU) Town Sealed Surface 20 Road hierarchy & construction type & Level of usage

All resealing


Patching that constitutes less than a segment of road.

Road sweeping

Line marking

Town Sealed Pavement 100

Formed Built Up (FBU) Township Sheeted Surface 20 Road hierarchy & construction type & Level of usage

All re sheeting & rip & reform Grading

Shoulder clearing & spraying

Township Formed Graded Surface

0 Grading

Unformed Built Up (UFBU) Township Unformed & Road Reserves

0 NA



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Town Infrastructure

Kerb & Guttering

Concrete Rollover 60 Construction type Any new assets acquired (e.g. from land developments)

General Kerb maintenance

Concrete Upright 60 Construction type Any new assets acquired (e.g. from land developments)

General Kerb maintenance

Footpaths

Concrete 40-50 Construction type All (re) construction work >$5K

Repairs, replacement or upgrades that constitute <$5K

Pavers 30 Construction type All (re) construction work >$5K


Spray Seal 20-30 Construction type All (re) construction work >$5K


Bike Way

Spray Seal 20 Construction type All (re) construction work >$5K


Rubble Construction type

Car Park Spray Seal 15 Construction type & Level of usage


Patching, sweeping, line marking

Street Furniture

Signage 15-20 Inventory Listing

Rubbish Bins 15 Inventory Listing

Street Lighting 20

Park Bench 10 Inventory Listing

Picnic Setting 20 Inventory Listing



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Property

Land & Easements Land & Easements NA No Capitalisation threshold applied to the acquisition of land.

Land Under Roads per AAS27A

Buildings

Buildings – not componentised

20-80 Complete building Asset thresholds apply Inspection & Maintenance Programs

Client Action Requests

All maintenance of any component of the building based on Decision Tree criteria.

Buildings – new buildings valued over $100K recorded at component level

40-80

Components

New buildings assets > $100K

Upgrade and extensions to assets

Replacing whole component

40-200

20-200

20-100

Buildings – valued under $100K recorded as one asset

20-100 New buildings assets < $100K

Upgrade and extensions to assets

Toilets – recorded as one asset

20-100 New & Upgrade or replacing asset > $20K

Sheds, garages, workshops, carports – recorded as one asset


Structures

Pergola, Carports, Gazebo, Shelters & other Structures – recorded as one asset


Other assets 10-60 Value of new assets acquired

Reserve Furniture

Fencing 30-50 Construction type All (re) construction work of existing reserve furniture>$5K

Value of new assets acquired

All maintenance to existing fences, monuments etc.

Graffiti removal, painting, cleaning and vandalism repairs.

Monuments 100 Construction type

Recreational Equipment 15-20

Furniture 10-30 Construction type

Reserve Furniture Other 10-60



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Stormwater Stormwater drains, storage tanks, dams, pumps and solar arrays

Pumps 10-15 Level of usage & type All (re)construction work > $5K

Any new assets acquired (e.g. from land development)

Water storage tanks 15-60 Construction type

Dams 80-100 Construction type

Stormwater drains 20-60 Construction type

Underground piping 60-100 Type

Community Wastewater Management Systems (CWMS) (Previously STEDS)

Gravity Drains, Pumping Stations, Rising Mains, Oxidation & Evaporation Lagoons, Storage Pond, Pump Shed, Solar Pump & Array, Header tanks, fencing, underground pipeline

Pumping Stations Civil Works

25-50 Construction type All (re) construction / replacement work on existing assets > $5K

Any new assets acquired (e.g. from land development)

Inspection & Maintenance Program

Replacement and repair of pit lids.

Pumping Stations Mechanical & Electrical

15-20 Frequency of use

Lagoons & Ponds 80-100 Construction type

Gravity Drains 70

Rising Mains 50-70

Pipelines 60

Header tanks 40-50

Pumps & Array 5-30

Plant, Furniture & Equipment

Plant (includes vehicles & machines).

Equipment (includes computers, printers)

Major Plant and Equipment 5-20 Asset type Expenditure <$5K for individual assets

Minor Plant and Equipment 5-10 Asset type

ICT Office Furniture & Equipment & software

5-30 Asset type

Costs associated with the purchase or major upgrades of core operating systems >$5K

All minor upgrades to core operating systems

Annual software licence and maintenance fees



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APPENDIX 2 – CLASSIFYING OPERATING / CAPITAL EXPENDITURE (DECISION TREE)

Assessment Flowchart

Is expenditure related to the day to day operations of Council? (e.g. phone, subscriptions, stationary, advertising)

Yes

No↓ OPERATING EXPENDITURE

Is expenditure related to maintain an asset in use without increasing its service potential/level of supply or life expectancy? (e.g. repairs – potholes, fencing, minor pipework, water damage, wear & tear)

Yes

No↓

Is expenditure related to renewing an asset which increases its service potential/level of life beyond original expectations? (e.g. Re sheeting / Resealing a road, replacing section of drainage network)

Yes

No↓

Is expenditure related to extending / expanding an asset at the same standard currently experienced by users to a new group of users to meet an increase in demand? (e.g. road / drainage network)

Yes

No↓

Is expenditure related to upgrading the standard / quality of an existing asset to provide higher level of service to users? (e.g. replacing drainage capacity, increasing road widths, building addition)

Yes

No↓

Will expenditure significantly reduce the cost of maintaining an existing asset?

Yes

Is there a cost estimation or other valuation methodology that can be used to measure the cost reliably and accurately for asset recognition purposes in Councils financial statements?

No

No↓ Yes↓

Will expenditure result in probable future economic benefits to Council

Yes

Does the estimation / valuation of the item exceed the capital recognition threshold with regard to the asset class to which it relates? – Refer attached threshold schedule for determination

No

No↓ Yes↓

OPERATING EXPENDATURE CAPITAL EXPENDITURE

Asset Management & Accounting Policy

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Transcript of Asset Management & Accounting Policy