4.3 Asset Recording and Reporting

The following instructions will assist organisations to comply with the asset management provisions of the service agreement.

An organisation must maintain a register of all department funded assets valued at $3,000 or more, where those assets are purchased from minor capital funds. An organisation must provide the department with an amended assets register at the time of submitting its annual financial reports.

Non-current physical assets (department funded)

Non-current physical assets are items that are valuable or useful and have a life expectancy of more than one year. For recording purposes, they can be defined as operating assets and are normally used to produce and deliver goods or services to the community. Such assets display one or more of the following characteristics:

• The cost of the asset can be recovered through use or disposal.
• The asset's useful life can be estimated with reasonable accuracy.
• The asset is used in the day-to-day operations of the organisation.
• The current cost of the asset can be determined with reasonable accuracy
• The asset is readily consumed and replenished.
• The types of non-current physical assets that need to be recorded include:
  • office equipment
  • motor vehicles
  • furniture
  • computers
  • communications systems
  • equipment.

Asset registers - what to record

The minimum information required about each asset is detailed in Attachment 1 Organisations assets register - data requirements. An example of an assets register is shown in Attachment 2 Sample of an asset register. The format of the register is at an agency's discretion provided all required information is included.

Organisations must label all the department funded non-current physical assets valued at $3,000 or more with a unique identification (ID) number to allow identification and periodic stock audits.

Organisations are encouraged to record all non-current physical assets on an assets register, regardless of the funding source, as an appropriate control procedure for the safe custodianship of assets under their control.

Recording similar assets as groups

Recording of assets should generally be on an asset-by-asset basis, although grouping of similar or related assets may be more practical in some situations. An organisation needs to weigh the relative costs and benefits of grouping assets in relation to the overall purposes of recording and reporting, including control over custody, disposal and replacement.

Multiple assets that combine to perform one function, for example a personal computer comprising monitor, keyboard and central processing unit, are normally recorded as one asset rather than as individual assets. The components can be replaced or interchanged without the need to adjust the assets register.

The cost of replacing an asset is treated as a maintenance cost and should be recorded in the financial records accordingly.

Where an asset comprises a large number of individual components that have complementary functions, the asset may be recorded as an aggregate item. For example, a set of books, periodicals and indexes that together make up a library could be viewed as a single asset for recording purposes. This approach would be applied in situations where the value of the individual components is less than $3,000, but the total value of the asset is more than $3,000.

Maintaining a register of existing assets

Organisations must maintain an asset register that includes all assets purchased with department funds.

Where an asset can be identified as being purchased with department funds, and is more than five years old and/or the purchase cost is not known, it should be recorded at the cost of a comparable item at current prices.

Where an asset is less than five years old and the purchase cost is known, it should be recorded at the net written down value (purchase cost less accumulated depreciation). Refer to Attachment 3 Sample depreciation of non-current physical assets and Attachment 4 Recommended annual depreciation rates for information on depreciation and depreciation rates.

Recording acquisitions and their costs

The acquisition of non-current physical assets should be recorded in the assets register in the month in which they are purchased.

Acquisitions should be recorded at the purchase cost including installation costs, computer cabling, transportation and other associated costs incurred to bring the asset into service. Purchase orders, invoices and delivery dockets should provide sufficient details for this purpose.

Leased assets

There are two types of leasing arrangements: operating lease and finance lease. A finance lease is an arrangement undertaken to finance the cost of acquiring a leased asset. Finance leases must be recorded in the assets register.

An operating lease is when the leased item is 'given back' at the end of the lease period.

Depreciation in accordance with Australian Accounting Standard

All non-current physical assets with a direct unit cost value of $3,000 or more must be depreciated in accordance with the Australian Accounting Standard (AASB116), Property Plant and Equipment. Annual depreciation charges must be calculated using methods consistent with AASB116, for example, straight-line or reducing balance, based on the purchase cost or the deemed value. The straight-line method is preferred (see Attachment 3).

Depreciation should commence in the month following the acquisition and installation of the asset (disregarding fractions of a month). The disposal of an asset should cause depreciation to cease at the end of the month in which the asset was disposed (disregarding fractions of a month).

When an asset is transferred from one organisation to another, it must only be depreciated to the end of the month of the transfer and reported in the organisation's statement of financial position at the end of the financial year. The organisation that receives the asset should record the asset at the written down value, as supplied by the transferring organisation, commence depreciation from the first full month following acquisition and include the asset in the statement of financial position at the end of the financial year.

A list of the standard depreciation rates that are applicable to the various types of non-current physical assets are detailed in Attachment 4.

If an organisation decides not to use the standard depreciation rates in Attachment 4, it should engage a suitably qualified person to determine a rate consistent with industry standards, based on the asset's estimated useful life at the time of acquisition. This approach may be necessary when dealing with any specialist equipment.

Be necessary when dealing with any specialist equipment.

Disposal of assets

When an asset is sold, transferred, scrapped or otherwise disposed of by an organisation, the assets register should be updated to include the date of disposal, the disposal amount and the method of disposal. The asset should only be deleted from the register at the end of the financial year – after the statement of financial position is finalised and the information incorporated into the organisation's annual report.

If an asset is traded-in, it should be treated as a disposal. When an asset is sold outright, the sale proceeds must be recorded as a receipt in the organisation's financial records and recorded on the assets register.

The organisation can only sell department funded assets listed in the assets register with the written approval of the department.

If the service agreement is terminated, or if the organisation ceases to be funded by the department, the organisation must dispose of the asset in a manner directed by the department. The proceeds from the sale of such an asset should be paid back to the department, or used in a manner directed by the department. The amount will equal the proportion of the department's contribution to the purchase price.

Stock audit

A stock audit should be completed annually and adjustments made to the asset register where necessary. A record of the stock audit conducted, its results and write-offs should be retained.

Further information

Your accountant will be able to help set up and maintain an asset register. For any further information, contact your PASA in the first instance.