Policy and Procedure

Name: Approved by: Last reviewed:

Control of Fixed Assets

Vice Chancellors Executive Group 24 June 2011

SECTION 1 - INTRODUCTION _________________________________________________________ 2 PURPOSE ____________________________________________________________________ 2 SCOPE ______________________________________________________________________ 2 DEFINITIONS__________________________________________________________________ 2 SECTION 2 - POLICY _______________________________________________________________ 4 PRINCIPLES __________________________________________________________________ 4 POLICY _____________________________________________________________________ 4 SECTION 4 - GOVERNANCE __________________________________________________________ 9 RESPONSIBILITY _______________________________________________________________ 9 VERSION CONTROL AND CHANGE HISTORY ___________________________________________ 9

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SECTION 1 - INTRODUCTION
PURPOSE
The purpose of this policy is to set down rules for acquiring, accounting for, disposing and otherwise dealing with fixed assets.

SCOPE
This policy and procedure applies University-wide excluding Sarawak campus.

DEFINITIONS
Word/Term Attractive Item Definition Either (1) an item of plant or equipment whose value is between $1,000 and the capitalisation threshold, or (2) an item of plant or equipment that is recorded in the asset register even though its value is below $1,000. The following components of buildings are recorded separately and are depreciated at differing rates, which are: 1. Building Shell - 2.4% pa 2. Fit Out - 10% pa 3. Plant - 5% pa 4. Reticulation services - 5% pa Elements that can be included in an assets value (see AASB116) Purchase price Costs arising from construction, design or development of the asset Site preparation Initial delivery, handling and installation Costs of testing Professional fees associated with the creation or design of the asset Cost elements that cannot be included in an assets value (see AASB116) Costs related to opening the facility Introductory costs such as training or promotion Administration and other general overhead costs. Should it be necessary to engage a resource solely to manage a specific project, fixed term recurrent university wide cost funding should be sought and obtained Recurrently funded salaries Were recurrently funded salaries capitalised, it would be expected that the recurrent budget for those positions would be permanently returned Threshold is $5,000 per item. Multiple items of an identical nature that aggregate to more than $5,000 will not be capitalised. an enhancement to an existing item of equipment is capitalised providing (1) it extends the useful life of the existing item by one or more years and (2) its purchase price exceeds the capitalisation threshold. Consumables that are used within an existing item of equipment are not capitalised, regardless of their purchase price. An item of plant or equipment whose service life is expected to exceed one year. Expenditure incurred to ensure the asset continues to operate at the current level of service until the end of its life. Maintenance is operational

Buildings and Building Components

Capitalisation Costs

Capitalisation Threshold: Enhancements to existing fixed assets

Fixed Asset Maintenance

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expenditure and the corresponding budget should be held in the recurrent operating budget. Major Refurbishment A major refurbishment is an enhancement to an existing fixed asset as it adds value to the expected economic return/useful life of a building by, for example: 1. updating an entire floor to bring the building to current standards, or 2. replacing or upgrading the complete lift infrastructure or other major plant It is not capitalised but becomes a Minor Work (see below) when: 1. it is mainly painting or relocating walls 2. replacement carpet and other such fittings are provided Building related works of a nature that will not be capitalised regardless of cost. For example, painting or relocating walls, replacing carpet and other such fittings and maintenance expenditure incurred to ensure the asset continues to operate at the current level of service until the end of its life

Minor Works

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SECTION 2 - POLICY
PRINCIPLES
This policy and procedure applies to fixed assets that satisfy the following criteria: 1. Item must be owned by the University or a controlled entity (rented items and items under operating lease are subject to different controls) 2. Except for Attractive Items, value of item must be equal to or greater than the capitalisation threshold. For this purpose an asset that consists of several components whose combined cost satisfies the threshold test or more are regarded as a single asset (an asset label would, however, be affixed to only one component - usually the costliest one).

POLICY
1. Approval Processes Acquisitions and Disposals Refer Policy & Procedures Delegation of Expenditure Authority. 2. Tendering and Quotations Rules for tendering and quotations vary depending on the amounts involved. They are contained in the policy and procedure Tenders and Quotations, which also sets out the steps to be followed in the tendering process. 3. Asset Register One Asset Register of depreciable items is maintained for the University by Finance Department. Information Technology Services maintains the attractive item register in Remedy in respect of IT equipment. Individual operating units are responsible for maintaining an attractive item register for other than IT items. 3.1 Equipment All items of equipment with a cost equal to or greater than the capitalisation threshold must be entered in the asset register. Items below the capitalisation threshold should be recorded in an "attractive items" register (but not capitalised), particularly those costing more than $1,000.. From the perspective of registration requirements there are consequently three classes of assets: 1. 2. 3. those that are above the capitalisation threshold and must be registered those that are below the capitalisation threshold but still registered those costing less than $1,000 that are not registered and expensed.

Three natural account codes are currently being used to record the expenditure on equipment. 8061 8061 8061 ITS Procured Equipment Purchases Other Equipment Purchases Motor Vehicle Purchases

refer Finance Accounting Fixed Assets. These natural accounts are used to record all expenditure on equipment, regardless of the value of the purchase. 3.2 Vehicles All vehicles owned by the University must be entered in the asset register

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3.3

Land and Buildings All land and buildings that the University owns or is responsible for must be maintained in the asset register. Major refurbishments will be added to the building subject to the refurbishment.

3.3.1

Capitalised Building and IT Projects: Finance Department Processes and Responsibilities a) b) c) d) e) Establish a Works sub-ledger in the balance sheet in Finance One Provide new projects in that sub-ledger as required (upon commencement of works for approved projects, for example, Capital Management Plan) Monitor the budget for each new project to ensure alignment with the University budget Provide financial project reports to Finance Committee for all projects in excess of $5m Upon completion, transfer from Works sub-ledger to (and record in) appropriate general ledger account and asset register

3.3.2

Capitalised Building and IT Projects: Business Unit (Facilities and ITS) Processes and Responsibilities a) b) c) d) Enter project details and the budget for each new project across each of the respective cost categories within that project Process all requisitions and transactions to the appropriate category of each project Manage project expenditure against budget in each project Provide financial project reports to Campus Planning and Building Committee for all projects

3.4

Finance Leases Duly authorised finance lease agreements must be entered in the asset register. The cost of the lease will be the liability under the contract; that is, the sum of lease payments and any residual value. Copies of all new leases or rental agreements must be sent to the Chief Financial Officer. Audit regulations require the University to establish and maintain a register showing details of all leases, mortgages and other forms of contract entered into in the name of the University. In addition, special accounting treatment of certain leases of equipment is a requirement under accounting standards.

4. 4.1

Purchasing an Asset Value Equal to or Greater than Capitalisation Threshold (Assuming Initiation of Asset Entry from GL Expense Account) Business Unit Processes and Responsibilities a) b) c) Ensure that approval processes are followed as set out in this policy. Enter requisition in the finance system and arrange for payment of the consequent invoice. If the item is an enhancement to an fixed asset advise the Asset Accountant in the Finance Department accordingly (details of current purchase, ID number of existing asset). Debit asset purchase to the appropriate natural account. Assets => Capitalisation Threshold ($5,000)

d)

4.2

Consolidation of assets

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Any equipment which uses more than one accessory to produce a single output can be grouped together and be treated as a one single unit in the Asset Register (but not multiple items of a like nature, for example, individual computers in a computer laboratory). Any teaching room upgrade for students can be consolidated, provided it is not of like pieces of equipment, is purchased to operate as a single unit and will be replaced as one at the same time. Any loose furniture which is not fitted in the building and any repair and maintenance will not be capitalised. 8061 8061 ITS Procured Equipment Purchases Other Equipment Purchases

Affix the asset ID label when it is received from Finance Department. Confirmation by email to Asset Accountant, Finance Department that label has been attached. 4.3 Finance Department Processes and Responsibilities a) b) c) d) e) f) 5. 5.1 Validation of data entered into the finance system relating to purchases of assets. Enter and commission asset in the finance system. Where the asset is an enhancement to an existing item of equipment amend the register by (1) adjusting the remaining useful life and (2) adjusting the value for depreciation. Despatch by internal mail of asset ID label corresponding to finance system register number to business unit. Journal entry capitalising the asset in accordance with approved accounting processes (concurrently with the commissioning). Regular review and follow up of incomplete asset requisitions and purchase orders.

Purchasing a Registrable Asset Value Less than Capitalisation Threshold (Attractive Items) Business Unit Processes and Responsibilities a) b) c) Ensure that approval processes are followed as set out in this policy and procedures. Enter requisition in the finance system and arrange for payment of the consequent invoice. Debit asset purchase to the appropriate natural account from the following table: Attractive Items (Registered Items <$5,000) 8061 8061 d) ITS Procured equipment Purchases (same as above) Other equipment purchases (same as above)

Commission assets and, except for IT items where the attractive item register is maintained by Information Technology Services (ITS), enter details thereof in the local attractive items register. Commission as "Stocktake Only". For IT items affix the asset ID label when it is received from ITS. Confirm by email to ITS that asset label has been affixed.

e) 5.2

ITS Processes and Responsibilities a) Commission and enter IT assets in Remedy when the items have been paid for. Despatch by internal mail of asset ID label corresponding to Remedy register number to business unit.

6.

Disposal of an Asset

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6.1

Business Unit Processes and Responsibilities a) b) c) Ensure that approval processes are followed as set out in the Policy and Procedure for the Delegation of Expenditure Authority. Ensure that proceeds from disposal (whether by trade in or cash) are credited to natural account no 6510). This also applies to the Trade in Value for motor vehicles. Written advice (e.g. Disposal form or email notification should be completed and sent to Asset Accountant, Finance Department, for any disposal. If applicable, asset ID label number, $ amount received and receipt number should also be completed) must comply with policies and procedures governing the disposal of assets.

6.2

Finance Department Processes and Responsibilities a) b) Register the disposal in the finance system. Journal entry disposing of the asset in accordance with approved accounting processes (concurrently with the registration of the disposal)

7. 7.1

Writing-Off an Asset Business Unit Processes and Responsibilities a) Ensure that approval processes for disposals of fixed assets are followed as set out in the Policy and Procedure for the Delegation of Expenditure Authority. Write off form should be completed with label number and circumstances leading to the request and sent to Asset Accountant, Finance Department, to remove the asset from the register. Arrange with Finance Department for an insurance claim should the circumstances warrant.

b) 7.2

Finance Department Processes and Responsibilities a) b) c) Register the write off in the finance system. Initiate disposal accounting entries for write-offs subject to insurance claims. File requests in register number sequence.

8. 8.1

Transfer of an Asset Business Unit Processes and Responsibilities Complete an Asset Transfer/Loan Form and send it to Asset Accountant, Finance Department.

8.2

Finance Department Processes and Responsibilities a) b) c) Register the new location in the finance system. Journal entry in accordance with approved accounting processes. File Asset Transfer/Loan Forms in register number sequence.

9. 9.1

Loans of Assets to Staff Business Unit Processes and Responsibilities a) b) c) Loans of fixed assets to members of staff for business use must be recorded on an Asset Transfer/Loan Form and authorised by the head of the business unit. Items returned from loan should be similarly recorded. Send Asset Transfer/Loan Forms to Asset Accountant, Finance Department in the Finance Department.

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9.2

Finance Department Processes and Responsibilities a) b) Register the new location in the finance system. File Asset Transfer/Loan Forms in register number sequence.

10 10.1

Stock takes of Assets Business Unit Processes and Responsibilities a) b) c) Perform stock take of fixed assets upon receipt of a request from the Finance Department. Resolve differences between actual stock and the asset register. Attest to the accuracy of the stock take.

10.2

Finance Department Processes and Responsibilities a) b) c) d) Arrange stock takes in such a manner that all business units are covered over a period of three years. Generate asset register report of stocktaking differences. Obtain resolution of differences from business units. Align register with stock takes.

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SUPPORTING DOCUMENTATION Forms and Records Management Form Retention Time Retention Location Asset Transfer/Loan Form available from Finance Department. *University Disposal Schedule is available at http://www.swin.edu.au/corporate/registrar/rms.htm Related Material Name Delegation of Expenditure Authority Finance Accounting Fixed Assets Tenders and Quotations

Location PPD PPD PPD

Document Type Policy and Procedure Policy and Procedure Policy and Procedure

SECTION 4 - GOVERNANCE
RESPONSIBILITY
Policy Owner Chief Financial Officer

VERSION CONTROL AND CHANGE HISTORY

Version Number 5.1 Approval Date 24 June 2011 Approved by Director, Governance and Policy Unit Executive Group Executive Group Finance Committee Finance Committee Director of Finance Amendment
Editorial amendments (account codes)

5 4 3 2 1

18 November 2008 12 June 2008 3 July 2001 29 May 2001 30 September 1999

Periodic review and update of document; minor amendment.

Previously known as Acquisition and Disposal of Fixed Assets

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