Capital Asset Management

Capital Asset Management

SUMMARY

The Capital Asset Management Policy establishes the University’s approach concerning the classification of assets; asset disposal; asset valuation; outlines which assets are to be capitalised in accordance with general accounting principles; provides the appropriate rate of amortisation of a capitalised asset based on its estimated useful life; and provides a basis for insurance coverage and the external reporting of capitalised assets.

The procedure outlines the steps to be followed by staff and students who are responsible for making decisions relating to University-owned assets.

Further information concerning annual rates of depreciation for newly acquired assets is provided within Schedule 1 – Depreciation.

POLICY

Purpose

The purpose of this policy is to:
  • identify what is classed as an asset
  • clarify the assets to which this policy applies
  • clarify responsibility for assets
  • clarify methods for the disposal of assets
  • determine which assets are to be capitalised in accordance with general accounting principles
  • determine the appropriate valuation of the asset
  • provide the appropriate rate of amortisation of a capitalised asset based on its estimated useful life and
  • provide a basis for insurance coverage and the external reporting of capitalised assets.

Overview

The University has a significant investment of public funds in the assets utilised throughout the University. To ensure that such an investment is properly managed, controlled and recorded, the State Government has, through the provisions of the Public Finance and Audit Act 1983 (NSW), provided a framework in which the University must operate. The Act also requires the Auditor-General to examine and report annually on the operations of asset control and reporting.

The Asset Management Section within the Business Services Unit of the Office of Financial Services (OFS), maintains a register of all University-owned Capital Assets as well as a register for those assets considered Attractive by the University using the Fixed Asset module of Finance One.

DEFINITIONS
Asset: any item of economic value, especially that which could be converted to cash. An asset can be:
  • Physical or Tangible – an asset which includes land, buildings, infrastructure, plant, equipment, motor vehicles, work in progress and works of art
  • Intangible – an asset which includes trademarks, patents, computer software and work in progress

Attractive Asset: a non-consumable item usually costing more than $1,000 but less than $4,999 and having a useful life of two years or more. These items are expensed in the year in which the expenditure is incurred.

Capital Asset: asset that has an individual cost or value of $5,000 or more (GST exclusive). The depreciated values of these assets are recorded in a balance sheet.

Capitalisation: the recording of an amount as an asset in the University’s balance sheet that could otherwise have been treated as an expense.

Non-capital Asset: see Attractive Asset.

Obsolete Asset: asset of no further use to the University, or with little or no resale value, that has not yet been disposed of.

Written-down Value (WDV): the value of a capital asset after deducting the accumulated depreciation from its original cost price or fair value when it was acquired.

Scope

This policy applies to all staff and students of the University and its controlled entities.

It will be of particular relevance to those staff and students who are involved in managing, reporting and using University-owned assets. This includes those staff responsible for making decisions regarding University-owned assets by virtue of their position as Executive Dean /Dean, General Manager, Head of Office, Asset Liaison Officer, Asset Officer and user of University-owned assets.

This policy applies to assets regardless of how they were acquired (eg via purchase, through a donation).

Policy

ACQUISITION
All assets purchased from funds administered by the University are the property of the University, except where an agreement to the contrary is part of the conditions associated with a particular grant or contract.

All acquisitions of Capital Assets will be entered in the Finance One system.

RECORDING
The University will record all acquisition and disposals of its Capital Assets in the Asset Register and selective Attractive Assets in the Attractive Asset Register. This will occur when the asset has been paid for in full.

CAPITALISATION
Capital works costs will be identified as an expenditure type of either Expense or Capital.

DEPRECIATION AND AMORTISATION
The University will depreciate Capital Assets over their useful life.

The University will use the straight line method of depreciation and review the rates of depreciation annually.

The annual rates of depreciation for all University acquired assets will be maintained in the Capital Asset Schedule.

A number of asset classes will not be depreciated, including Land, Works of Art, Sculptures, Museum collections and the Special Library collection.

FULLY DEPRECIATED ASSETS ($0 VALUE)
The Asset Management Section will conduct a quarterly review of nil value depreciated assets that are on the Asset Register and have not been disposed to test if an asset is obsolete

DISPOSAL OF ASSETS
Disposal of a Capital Asset requires approval by the Executive Dean/Head of Office as well as the Chief Financial Officer or Deputy Chief Financial Officer. Approval is required even when the written-down value (WDV) is nil.

Capital Assets (with the exception of motor vehicles) will be disposed of using one of the following methods:
  • direct sale – where financially beneficial to the University and approved by the Chief Financial Officer
  • advertisement in Staff News
  • transfer to another financial unit within the University
  • transfer to an external organisation
  • sale by full public auction
  • disposal by scrapping or dumping
  • removal from the University through e-waste.
Attractive Assets will disposed of by:
  • offering the item to other areas of the University, and if not wanted,
  • advertisement in Staff News.

Motor vehicles will be disposed of by auction only. An auction will be held when the vehicle has reached approximately 40,000 kilometres, is two years old or is no longer required.

Departure from the above methods of disposal may be approved by the Chief Financial Officer, the Chief Operating Officer or the Vice-Chancellor.

STOCKTAKE  AND  VALUATION
The University will:
  • value land and buildings every year
  • value property, plant, equipment and collections  over a three year period
  • conduct a rolling stocktake over a  two year period
  • report capital assets annually to the Audit Office of NSW.
COMPLIANCE AND BREACHES STATEMENT
The University may commence applicable disciplinary procedures if a person to whom this policy applies breaches this policy (or any of its related procedures).

Policy Information

Contact OfficerPurchasing and Asset Manager, Office of Financial Services
Date Approved16 July 2012
Approval Authority

Chief Operating Officer and Deputy Vice-Chancellor

Date of Commencement16 July 2012
Amendment History

25 May 2017 - updated Approval Authority from Chief Operating Officer to Chief Operating Officer and Deputy Vice-Chancellor
12 February 2014 – replace Purchasing Policy / Guideline with Procurement Handbook; updated Position Title to Chief Operating Officer
16 July 2012 – Alignment with the Policy Framework

Date for Next Review16 July 2014
Related Documents

Capital Asset Management Procedure / Schedule
Purchasing Procedure
Procurement Handbook

Legislation

Public Finance and Audit Act 1983 (NSW)
Policies / Rules Superseded by this Policy

Any previous policy or directive on capital asset management

KeywordsAsset, Capital Assets, Attractive Items, Non consumable items, Depreciation, Asset Liaison Officers, Stocktake, Asset Verifications, Disposals, Acquisitions, Transfers.

PROCEDURE

Purpose

To outline the steps to be followed by staff and students who are responsible for making decisions relating to University-owned assets by virtue of their positions such as Executive Dean, Dean, Head of Office, Faculty General Manager, Asset Liaison Officer, Asset Officer or user of University-owned assets.

Procedure

It is the responsibility of staff to take appropriate and reasonable measures to identify, safeguard, track and record all Capital and  Attractive (non-capital) Assets. Adhering to this procedure will assist in ensuring compliance with applicable legislation.

This procedure requires actions by the following: The steps in this procedure are:

Asset Officer

TRAINING
Provide training as follows:
  • train Asset Liaison Officers in correct procedures, including how to ensure the integrity of the Asset Register
  • train newly appointed Asset Liaison Officers in stocktake procedures at the time of their appointment
  • retrain existing Asset Liaison Officers as part of the preparation for a stocktake.

Staff member

ACQUISITION
Enter Assets into Finance One
When acquiring assets, enter a requisition into the Finance One Purchasing Module using the correct natural account – eg for plant and equipment this would be:
Capital assets                                                5005
Non-capital assets                                         5006
Information technology capital projects         5016
Information technology
 equipment/software below $5000                5017
Equipment and appliances below $5,000      5018
Laboratory equipment below $5,000             5019
Capital improvements (Property)                    8205
Capital improvements (Informatics)                8224
Capital improvements (Others)                      8225

Asset Officer

Review Finance One
Provide details of assets by doing the following:
  • note asset purchases through Finance One that have been identified as an asset but are not easily recognisable
  • send details to the relevant Asset Liaison Officer
  • require the Asset Liaison Officer to provide the complete information, using the Asset Data Form (ADF), including a serial number and the location as a minimum, electronically and within five working days (and if possible, prior to month end).
Reconcile Assets
Reconcile all capital assets on a monthly basis including the following asset categories:
  • land
  • buildings
  • infrastructure
  • works of art
  • museum collections
  • coin collections
  • library – Special Collection
  • patents
  • plant and equipment
  • information technology assets
Review Rates of Depreciation
On an annual basis, review the current rates of depreciation assigned to each category, as specified in the Capital Asset Schedule.

Asset Liaison Officer

Provide details of acquired assets
Complete an Asset Data Form (ADF) to provide details to the Asset Officer of any assets that have been acquired but are not on the Asset Report, including any donated assets.

Administer assets
Take responsibility for the assets of the financial unit, as follows:
  • match assets received with a purchase order and stores delivery advice
  • ensure assets received are in good working order
  • ensure assets are readily identifiable and records are kept of unique identifying numbers
  • ensure assets are adequately secured
  • ensure staff ceasing duty with the University return all University items in their possession. 

Asset Officer

RECORDING
Record all capital asset details including acquisitions and disposals (sale, transfer, destruction and theft) in the Asset Register.



Calculate Cost

To calculate the cost of a purchased asset include the:
  • purchase or acquisition price
  • related freight costs
  • installation charges
  • customs charges and taxes
  • any other direct costs that are incurred getting the asset into a condition necessary for its intended use

Direct Costs
To calculate equipment costs, include additional items even if they were not initially ordered as a single amount as part of the initial cost (eg items required for equipment that cannot be commissioned unless all are fitted).

Include software if it is included with the equipment, and warranty costs for the first year.

Training and Maintenance Costs
Do not include training or maintenance costs, except where these costs cannot be separated from the acquisition cost.

Information Technology (IT) Equipment
All Information Technology equipment should be leased. Leased equipment cannot be capitalised unless specific grant funding has been provided for the purchase of this equipment.

Group Assets
Where the purchase price of a group of assets is above $5,000, and includes individual items that can operate independently, do not group the assets but cost them as separate items (eg if you purchased ten chairs at a total cost of $5,600, the individual value of each chair is $560, therefore this will not be included in the Asset Register).

Where the purchase of a group of assets is for the purpose of improvement, and is not merely a replacement of ‘like with like’, the purchase is to be capitalised.

Record those assets with a cost of $5,000 or more.

Attractive Assets
Do not record assets costing less than $5,000 in the Attractive Asset Register, except for:

  • laptops costing $3,000 or more (no other computer equipment)
  • digital cameras costing $3,000 or more
  • all other equipment deemed to be assigned for personal use while employed at the University eg iPhone, Blackberry, iPad
  • any other item of equipment the University/Faculty/Office deems an Attractive Asset where the item cost more than $1,000 but less than $4,999 (GST exclusive) and have a useful life of two years or more.
Note that these items are recorded to assist with expenditure control purposes at the financial unit level, and for security and insurance purposes, as they are considered to be at risk of theft. Attractive items are expensed in the year of acquisition

Property Officer

CAPITALISATION
Determine Major Capital Works Category
Before commencing major capital works (eg building related, major Information Technology ( IT) project), determine whether the project is for capital improvement or repair and maintenance, as follows:
  • capital improvement involves making significant additions, alterations, renovations or structural changes that extends the useful life or adapts the space for changing needs or standards. It also includes enhancements and improvements to the value and/or performance of the original asset (eg the replacement of a roof using better materials is a capital improvement and is to be capitalised)
  • repair and maintenance involves restoring an item to its normal operating condition or to prevent further deterioration and service interruption. This includes minor improvements that enhance appearance but do not change the functionality of the asset. Payments of this nature should be expensed in the year purchased.
Note that natural account 8205 (managed and controlled by Property in conjunction with OFS) has been established for work in progress capital improvements. Natural accounts also exist for Informatics (8224) and for all other items (8225).

Asset Officer

Identify Capitalisation and Expense costs
The Property Officer provides monthly reports of the capital project against planned deliverables, timelines and approved project budget.
Receive these reports and identify what is to be capitalised or expensed and make the necessary movements from the work in progress account.

Capitalisation of costs should begin when a project has been approved with the intent it will be completed. For a rejuvenation of existing buildings/infrastructure project or IT project, the stage of the project determines whether the costs are to be capitalised or expensed. There are three stages for capitalisation purposes:
  • Stage One - Preliminary
    Activities in the initial investigation, scoping and feasibility phases occur before the project is approved to proceed. These activities include relocation of existing tenants and related decanting costs, and demolition of old construction. Costs associated with these preliminary steps are not considered to be part of major capital works and are therefore to be expensed as incurred.
  • Stage Two - Construction
    Once the project and funding has been approved, activities in the construction phase begin. These include design, documentation/specification, site preparation (including site preparation of old construction), construction and fit out.
  • Stage Three - Post-construction
    Post-construction activities are those performed once construction has been completed. For buildings, the completion date would be the date shown on Certificate of Practical Completion, which is issued by a registered architect. Post-construction includes costs for remedial work to end of warranty period, removalist costs and on-going maintenance costs.

Capitalisation of costs should cease when the Project Sponsor has signed off that project objectives have been met and that the project is complete and ready for its intended use.

On a monthly basis, work with Informatics and the relevant Capital Works Project Manager to compile a report on work in progress for capital improvements and send it to the Asset Officer.

Examples of costs to be capitalised (subject to the capitalisation threshold) and expensed are provided in the table below:

Project Stage/Phase Activity/Cost Item Description Expenditure Type
Preliminary Stage
(before approval to proceed)
  • initial investigation
  • scoping
  • feasibility
  • relocation
  • demolition of old construction
Expense (Investigate possibility of using Asset Revaluation Reserve)
Preliminary Stage
  • obtaining planning and building permits
Capitalise
Construction Stage
  • obtaining planning and building permits
  • detailed design and specification
  • site preparation
  • construction
  • project management/contractor costs directly attributable to that project.
  • fit out costs
  • initial delivery and handling costs
  • installation costs
  • professional fees for architects and engineers
Capitalise
Post-construction Stage
  • recurring maintenance and Infrastructure support
  • ongoing administrative costs of running the facilities (ie any cost that cannot be directly attributable to a particular new acquisition or building, is not be capitalised).
Expense

Staff Member

DISPOSAL
Note that:
  • disposal includes sold, transferred, written-off and stolen assets
  • the sale of second hand equipment by the University is subject to GST
  • the Executive Dean/ Dean / Head of Office is responsible for ensuring the appropriate disposal methods are followed and eliminating any conflict of interest as part of the sale.
Prior to disposal, work with the Asset Liaison Officer to complete an Asset Data Form and include the following information:
  • the asset number and description of the asset
  • the reason for the disposal
  • the proposed method of disposal, which varies depending on the type of asset and its value.
  • a confirmation email or signature from the Executive Dean/ Dean /Head of Office authorising the disposal.
Where the asset number is not known, then a description of the asset will be required as well as the asset:
  • purchase order number
  • initial cost
  • current written down value
  • serial number
  • current location
  • current custodian.

By Sale
The method of disposal used for the sale of assets (with the exception of motor vehicles) will depend on the Written Down Value of the asset being disposed.

A direct sale is only applicable where an item is unique and the sale is financially beneficial to the University.

When the original asset cost under $5,000:
  • check whether any other area of the University is able to utilise the asset (for office furniture, use the Macquarie University Furniture and Electronic Re-Use and Recycling Scheme). If not,
  • obtain a written recommendation for the sale from the Executive Dean/ Dean/ Head of Office
  • refer the recommendation to the Asset Officer for the appropriately delegated officer to determine whether to approve the sale
  • then advertise the item for sale in Staff News.
When the original asset cost $5,000 or more (except for motor vehicles):
  • arrange for a full public auction, or
  • submit a case to the Chief Financial Officer (CFO) for approval to sell by other means.
A full public auction will involve:
  • advertising the item(s) for sale in internal publications (eg Staff News) or in external newspapers
  • an open auction where the highest bidder wins the purchase of the asset
  • the Faculty/Office conducting the auction, sending all bidding details to the Asset Manager
  • the Asset Manager recording the highest bid and providing this information to the Faculty/Office
  • the Faculty/Office informing the successful bidder
  • the Faculty/Officer issuing an official University receipt to the purchaser upon receipt of payment for the asset.
Motor Vehicles
Disposal of motor vehicles is by auction. This is to occur once the vehicle:
  • has reached approximately 40,000 kilometres, or
  • is two years old, or
  • is no longer required.

The auction must be arranged by the Purchasing Section, Office of Financial Services, through the University's selected auctioneer or, occasionally by trade-in.

For all sales, record acceptance of the highest offer or advertised price. Issue a tax invoice to the purchaser within 28 days of the date of sale.

By Transfer
Note that all assets purchased from funds administered by the University are the property of the University. The only exception is where an agreement to the contrary is part of the conditions associated with a particular contract or grant, and this has been agreed by the Chief Financial Officer.

Transfer within the University
Where responsibility for an asset changes from one financial unit to another, written acknowledgement along with an updated Asset Data Form is required from the delegated authority of both financial units.

Report to the Asset Officer a transfer involving the physical movement of an asset but no change in responsibility.

Transfer to an External Organisation
Transfer of an asset to another organisation is only possible when:
  • the Executive Dean / Dean/ Head of Office certifies that the asset is not required for use within the University by other members of staff in their research or other professional duties
  • the Chief Financial Officer or the Deputy Vice-Chancellor (Research) approves the transfer, and
  • the Chief Financial Officer or the Deputy Vice-Chancellor (Research) has negotiated an agreed price for the transfer with a counterpart at the other organisation.
In addition, when a current research project is transferred to an external organisation, it is also possible for assets to be transferred but only where the following conditions are met:
  • the particular grant or contract must contain a condition that these assets revert to the external organisation at the conclusion of the agreement
  • the assets must have been purchased for the project using external research funds, and
  • agreement must be reached between the University and the other institution. The Chief Financial Officer and the Deputy Vice-Chancellor (Research) are delegated to commit the University in such negotiations.
Due to Theft or Destruction
  • on campus – contact Security on 9850 7112
  • off campus – notify the Police and then inform Security on 9850 7112
  • in all cases notify your immediate supervisor and the Asset Liaison Officer / Executive Dean/ Dean/ Head of Office, and Taxation and Insurance Officer.

Write-off
An asset must be written off if it is not in use or has no value.

Other Assets
Assets not covered by the above that are reported as being disposed are required to be destroyed, disposed of appropriately by e-waste, recycled or cannibalised, with useful components kept as spare parts if appropriate.
Taxation and Insurance Officer

Advise the Asset Officer of any reported asset thefts.

Asset Liaison Officer

Notify Asset Officer of all disposals
Notify the Asset Officer of all disposals of assets by submitting an Asset Data Form.

Asset Officer

Update Asset Register
Receive notification of disposal of assets and prepare a report for the Chief Financial Officer and the Finance and Facilities Committee.

Remove an asset from the Asset Register (ie write-off the asset) in the following circumstances:
  • sale of the asset
  • obsolescence of the asset due to it being:
    • no longer operational and uneconomical to repair
    • uneconomical to maintain or service
    • surplus to requirements
    • technologically redundant or inferior and it does not make commercial or operational sense to keep (ie it has become aged and it is operationally inefficient or lacks commercial sense to maintain or it forms part of a larger asset eg a computer network that is not compatible with newly acquired items within that a larger asset set)
  • theft, destruction or misplacement
  • transfer to another organisation.

Review and Report Assets
Conduct a quarterly review of all assets that are on the Asset Register with a nil value. Each financial unit will determine whether those assets are still in use, and if so, determine and advise the value of each asset (if practical) and its effective life. Write-off an asset that is not in use or has no value.

Report all capital assets sold or otherwise disposed of to the Finance and Facilities Committee of the University Council.

STOCKTAKE
Conduct a rolling two year stocktake of all physical assets to help reduce losses, and to ensure the information on the Asset Register is correct.

The Audit Office of New South Wales requires the University to provide written certification as to the existence and condition of all capital assets at year-end. This is in addition to any asset stocktake held during the financial year. Therefore, by November of each year, send an email to the Asset Liaison Officer and Executive Dean/ Dean/ Head of Office and include a list of all capital assets that are recorded on the Asset Register that are attributable to that financial unit.

Organise a Stocktake
Agree with the Asset Liaison Officer a date and time for a stocktake.

Supply an Asset Report (extracted from the Fixed Asset Register), in advance of the stocktake and select random items from the list for verification.

Asset Liaison Officer

Prepare for a stocktake
Prepare for the stocktake by reviewing the list of assets and arranging for access with the relevant custodians.

Perform a Stocktake
Either you or the relevant Executive Dean/ Dean/ Head of Office must:
  • ensure and certify that the selected assets on the Asset Report are accounted for
  • ensure that missing assets are noted and action is taken to locate them
  • detail the circumstances relating to any assets declared missing (eg the steps taken to locate such assets)
  • advise the Asset Officer of any assets that are obsolete, unused or missing and arrange for them to be written-off
  • ensure the details of all assets on the Asset Report are correct
  • advise the Asset Officer of any assets that should be included on the Asset Report providing all relevant details such as the cost, date of purchase, supplier, location, custodian etc.
  • sign to confirm the assets have been the subject of the stocktake, certifying the observations made and any actions required, and
  • arrange for the Asset Officer to co-sign the document.

Purchasing Officer

Dispose of Motor Vehicles
Arrange the disposal of a motor vehicle through the University’s selected auctioneer, or occasionally by trade-in. Auctions must only be arranged through a Purchasing Officer, Business Services Section.

Report all sales to the Asset Manager and Tax Officer, providing the post sale summary report from the Auctioneer.

Executive Dean/ Dean /Head of Office

Verify Assets
At the end of each calendar year, provide written certification (via email) to the Asset Officer that the assets listed:
  • exist
  • are in good order
  • are under the custody of their financial unit, and
  • that the details of the assets are accurate.
Chief Financial Officer Approve the disposal of Capital assets and provide a report of these disposals to the Finance and Facilities Committee.
Finance and Facilities Committee

Receive a report of the disposal of all capital assets.

Assistant Director, Business Services

VALUATIONS
Organise valuations of University assets, as follows:
  • Property, Plant and Equipment Engage external professional valuers to determine the fair value of land, building, plant and equipment, and infrastructure.

    Arrange a full-scale valuation over a three year period for plant and equipment and a full valuation of land and property every twelve months.

    Use this information to:
    • inform the insurance portfolio
    • provide accurate and up to date information for balance sheets and end of year financial reporting.
  • Collections Every three years, engage a specialist in the relevant field to value unique assets such as artwork, library collections and museum collections.

Procedure Information

Contact OfficerAsset Officer
Date Approved16 July 2012
Approval Authority

Chief Operating Officer and Deputy Vice-Chancellor

Date of Commencement12 July 2012
Amendment History25 May 2017 - updated Approval Authority from Chief Operating Officer to Chief Operating Officer and Deputy Vice-Chancellor
15 July 2014 – amend natural account code (Property); extend Date for Next Review
14 February 2014 – replace Purchasing Policy / Guideline with Procurement Handbook;  updated position title to COO
16 July 2012 – alignment with University Policy Framework
Date for Next Review16 July 2015
Related Documents

Capital Asset Management Policy / Schedule 
Purchasing Procedure
Procurement Handbook

Asset Data Form

Macquarie University Furniture and Electronic Re-Use and Recycling Scheme
KeywordsFair Value, Capital, Asset, Asset Liaison Officer

SCHEDULE 1 - Depreciation

PurposeTo detail the current annual rates of depreciation for newly acquired assets. All values are in AUD.

Schedule

Item Annual rate
Land (not depreciated) 0%
Works of art (not depreciated) 0%
Special library collection (not depreciated) 0%
Sculpture (not depreciated) 0%
Museum collection (not depreciated) 0%
Buildings (based on remaining useful life)1.72 – 33.33%
Infrastructure (based on remaining useful life)4.76 - 5.%
Intangibles5%
Plant and equipment (including furniture, scientific and office equipment, and usually plant, whether integral to a building or not) 10%
Motor vehicles 15%
Library and teaching collections 20%
Computing equipment 30%
Medical equipment over $200,00010%
Medical equipment under $200,00020%
Short Term IT Assets (Ancillary Systems)10%
Long Term IT Assets (Core Systems)5%

Schedule Information

Contact OfficerDeputy Chief Financial Officer-Operations
Date Approved16 July 2012
Approval AuthorityChief Operating Officer and Deputy Vice-Chancellor
Date of Commencement16 July 2012
Amendment History25 May 2017 - updated Approval Authority from Chief Financial Officer to Chief Operating Officer and Deputy Vice-Chancellor
Date for Next Review16 July 2014
KeywordsAsset
Policy AuthorisationCapital Asset Management Policy
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