Professional Documents
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Handbook
Revision History
The purpose of this Handbook is to ensure that Fixed Assets owned by the University are
appropriately measured, recorded and reported accurately in the financial systems, Annual
Financial Statements and management reports.
2. DEFINITIONS
2.1 Acquisition
Obtaining control of an asset by purchase, construction or donation.
2.3 Capitalisation
Recognition of expenditure as a fixed asset (i.e. capital expenditure).
2.5 Cost
The amount of cash or cash equivalents paid or the fair value of other consideration given to
acquire an asset at the time of its acquisition or construction.
2.8 Depreciation
The systematic allocation of the depreciable amount of an asset over its useful life.
2.19 Stocktake
A stocktake is a verification of the quantities and condition of assets held by the University.
An asset can be physical or tangible (e.g. land, buildings, plant, equipment, motor vehicles,
Artworks) or intangible (e.g. computer software).
An asset may be acquired directly by purchase, bequest or donation, or result from construction
(e.g. a new building or a renovated facility). During the construction phase, the asset is known as a
construction-in-progress asset.
In accordance with AASB 138 Intangibles paragraph 21 an intangible asset shall be recognised if,
and only if:
(a) it is probable that the expected future economic benefits that are attributable to the asset will
flow to the entity and
(b) the cost of the asset can be measured reliably.
Accounting Policy Framework (State Government legislative requirement) APF III Asset Accounting
Framework allows the University to adopt a capitalisation threshold. APS 2.15 states “To minimise
costs, a non-current asset, or group of assets as defined in APS 2.17 and APS 2.18, with a fair value
at the time of acquisition of less than $10 000 need not be recognised (capitalised) as an asset. That
is, it may be expensed in the period in which it is acquired’.
Property, plant and equipment items with an original cost or fair value greater or equal to $10,000
are to be recognized and recorded as a fixed asset. Capitalised assets are displayed on the
University's balance sheet and depreciation on capitalised assets is recorded at the University level
(Corporate). At the Division/Unit level assets are expensed immediately, with an offsetting entry at
the University level (prepared by Corporate Finance).
Property, plant and equipment items with an original cost or fair value less than $10,000 are to be
expensed in the Operating Statement at the time of purchase at a Division/Unit level.
The University may from time to time purchase additional components that will form part of an
existing asset. In this situation, the cost of the components would be added to the cost of the
existing asset, regardless of the components cost.
Library collection
All Library books and journals, together with related binding and technical services, purchases
made by the University Library are recognized and recorded as fixed assets, including those costing
less than $10,000. The Library collection is capitalised at the end of each year and is recognised as
Books (e-books and monographs) and Journals.
Donated Assets
Where an asset is gifted to the University at no cost, or for a nominal consideration, the cost of the
asset for accounting purposes is the fair value of the item at the date it was acquired, plus all
expenditures directly attributable to bring the asset to the location and condition necessary for its
intended use or sale.
The University’s fixed asset register is maintained by Corporate Finance (Finance Unit) and records
details such as description of the asset, its location, its cost, current depreciated amount,
depreciation written off to date, its estimated useful life and residual value.
In order for the asset to be capitalized in the University’s fixed asset register, purchase orders
and/or invoices relating to the purchase of capitalised assets must be coded to the relevant capital
purchase item code (listed above). Transactions coded to these item codes are reviewed monthly
by Corporate Finance (Finance Unit), any mis-coded transactions will be transferred to the
appropriate item code.
To enable the creation of an asset on the fixed asset register, a Division/Unit is to complete an FS65
Asset Addition form when an asset purchase/donation takes place (FS65).
Library Collection
Purchases in these item codes will be added to the fixed asset register at year end, after all the
purchases for the year have been made. FS65 Asset Addition form not required for acquisitions due
to the annual revaluation process undertaken during the Annual Financial Statement process.
4.1 Disposal
Assets can be available for disposal because they are:
• no longer required due to changed procedures, functions or usage patterns
• occupying storage space and not being needed in the foreseeable future
• reaching their optimum selling time to maximise returns
• part of an asset replacement program
• required to be disposed of under a particular policy
• technologically obsolete and operationally inefficient
• no longer complying with workplace health and safety standards
• beyond repair but able to be sold for scrap
Cost centres are encouraged to dispose of assets where the cost of holding the asset exceeds its
benefits.
In offering goods for sale, the University must be careful to not misrepresent the goods, offer
defective goods or offer any kind of warranty.
Choice of the most appropriate disposal option will normally be influenced by the nature of the
goods for disposal and by their location and market value.
In accordance with Accounting Policy Framework (State Government legislative requirement) APF
III Asset Accounting Framework, an intangible asset will be derecognised on disposal or when no
future economic benefits are expected from its use. The gain or loss on sale or disposal of an
intangible asset will be disclosed in the Statement of Comprehensive Income (paragraph APS
12.15).
VCA approval is required even when the written down value has reached zero in the fixed asset
register.
Where an item of plant or equipment has been sold to an employee of the University, the
employee purchasing the asset cannot authorise the FS64 Asset Disposal form even though they
may have appropriate delegation under the VCAs.
For assistance to identify whether the item to be sold is on the fixed asset register please contact
Assistant Accountant – Assets ext: 21063.
The disposal of assets held on the fixed asset register must be advised to Corporate Finance
(Finance Unit) by way of the submission of a completed FS64 Asset Disposal form within 2 weeks of
the disposal (FS64).
The FS64 Asset Disposal form must be authorised in accordance with VCAs and sent to Assistant
Accountant – Assets (Internal Post code 101-06) or emailed to FinancialReporting@unisa.edu.au.
Library Collection
Disposal of these items will be actioned in the fixed asset register at year end. An FS64 Asset
Disposal form is not required for disposals due to the annual revaluation process undertaken during
the Annual Financial Statement process.
Accordingly:
• If the sale price is less than 75% of the original purchase price, the sale will be GST-free (tax
code F) under section 38-250 of the GST Act (the non-commercial rules)
• However, if the sale price is equal to or more than 75% of the original purchase price, then no
special rules will apply and the sale will be subject to GST (tax code T)
The ‘non-commercial rule’ needs to be considered when we make sales through Auction Agencies.
For further information regarding GST implications please contact the University Tax Accountant.
Notification of transfers must be advised to Corporate Finance (Finance Unit) by way of the
submission of a completed FS66 Asset Relocation form approved by the Cost Centre Manager
(FS66) advising asset relocation and asset location details.
Loans to staff of assets must also be made in accordance with FS69 Asset Loan Agreement & FBT
Declaration (FS69).
Depreciation of an asset begins when it is available for use, that is, when it is in the location and
condition necessary for it to be capable of operating in the manner intended by management.
Depreciation of an asset ceases at the earlier of the date that the asset is classified as held for sale
(or included in a disposal group that is classified as held for sale) in accordance with AASB 5 Non-
current Assets Held for Sale and Discontinued Operations and the date that the asset is
derecognised. Therefore, depreciation does not cease when the asset becomes idle or is retired
from active use unless the asset is fully depreciated.
Where an asset is subject to partial or progress payments depreciation will not commence until the
payment cycle is complete and the asset is available for use.
The three most common methods used for calculating depreciation expense are:
• Straight-Line Method - constant charge over the useful life if the asset’s residual value does
not change
• Diminishing Balance Method - decreasing charge over the useful life. The earlier periods bear a
greater portion of the cost of consumption than later periods
• Units of Production Method - charge based on the expected use or output. Examples of output
or service include production units, operating hours, and distance travelled
Depreciation is provided for all University property, plant and equipment other than land, art
collection, buildings under construction and plant and equipment in progress.
The University currently does not have any leased plant and equipment.
In accordance with AASB 116 Property, Plant & Equipment paragraph 51 the residual value and the
useful life of an asset shall be reviewed at least at the end of each annual reporting period and, if
expectations differ from previous estimates, the change(s) shall be accounted for as a change in an
accounting estimate in accordance with AASB 108 Accounting Policies, Changes in Accounting
Estimates and Errors.
Under Australian Accounting Standards, the University has a statutory requirement to maintain an
accurate and updated fixed asset register. In accordance with this requirement, the University has
adopted an annual stocktake process.
During this process Cost Centre Managers are responsible for providing a certificate for assets
under their control to provide confirmation of the existence and condition of the University’s
physical assets.
The University has adopted a $10,000 threshold value for recognising an asset for financial
reporting purposes and therefore not all assets owned by the University are recorded on the fixed
asset register.
All Assets listed in the classes above are required to be verified and reviewed for any required
impairment testing in the annual stocktake process. All assets are to be physically sighted where
practical, and verified via other means where not practical. In the case of intangibles, if the
software is still be utilized, it can be considered verified for stocktake purposes.
6.3 Impairment
In accordance with AASB 136 Impairment of Assets and Accounting Policy Framework (State
Government legislative requirement) APF III Asset Accounting Framework the University fixed
assets must be considered for impairment testing annually. The University completes this
impairment testing as part of the stocktake process, if indicators of impairment are present.
Impairment testing involves testing any assets where there are indications that the value of the
specific asset is worth less than the value it’s carried at on the fixed asset register (referred to as its
carrying amount/book value/depreciated value). An asset is impaired when its carrying amount is
significantly greater than its recoverable amount i.e. the amount it could be sold for.
An indicator is only relevant if the recoverable amount of the asset or group of assets is sensitive to
the indicator. If there is no evidence of impairment the University does not have to make a formal
estimate of recoverable amount. Where there is an indication of impairment, the University will
need to determine the recoverable amount.
During the stocktake, where impairment of an asset is identified this must be indicated on the
Asset Stocktake Reports. Those considered material will be recommended for approval by Finance
Unit (Corporate Finance) to the Chief Financial Officer and if approved, processed in the fixed
assets register.
Asset Stocktake Reports are prepared at an Org2 level as this is the lowest reporting entity level
attached to assets, and as a result the report may contain more than one cost centre manager.
1. Sight all assets listed on the reports and confirm that each asset is
• on hand and in use, or
• on hand and not in use, or
• disposed or written-off
Where an asset has been moved or relocated, provide the new location details on the asset
stocktake report.
Where an asset has been disposed or written-off, complete a Fixed Assets Annual Stocktake
Disposal Form (FS68) which needs to be approved in accordance with section 4.2
Authorisation for Disposal
4. Provide estimates of
• remaining useful life
• current replacement cost
5. Completion of FS65 Asset Addition form for any new assets identified (FS65).
6. Provide any identifying numbers, e.g. serial numbers or registration numbers that are not
currently recorded as part of the asset details.
7. Certify that a full stocktake of assets has been performed in accordance with this policy having
the completed asset stocktake report signed by the appropriate Deputy Vice Chancellor, Pro
Vice Chancellor, Head of School, Institute Director or Unit Director.
7.2 Reconciliations
At the end of each monthly accounting period the Finance One fixed asset register will be
reconciled to the:
• Excel register
• General ledger
These reconciliations will normally be completed within 5 working days of the relevant accounting
period end date. The reconciliations will be independently reviewed, with the review normally
being completed within 10 working days from the relevant accounting period end date.
Corporate Finance (Finance Unit) will investigate any discrepancies and take corrective action.
This reconciliation will normally be completed within 7 working days of the relevant accounting
period end date and distributed to Division/Unit accountants.
Item Description
1232 Asset Purchase - Computer Software (>$10k)
Item Description
1231 Computer Software and Licences
When a possible asset purchase is identified, details of the transaction will be forwarded to the
relevant Division/Unit Accountant and any other relevant Division/Unit staff for follow up.
Division/Unit Accountants should also consider transactions in these item codes the identification
of assets.
FIXED ASSET HANDBOOK VERSION 1.2 Page 25 of 27
Fixed Asset Handbook
Accounting Standards
Accounting Policy Framework (State Government legislative requirement) APF III Asset Accounting
Framework
University Forms
University References
Procurement Handbook