Fixed assets Management

Asset Management experience and duties included:

Asset Management

Involved in First Time Implementation of GRAP 17 in municipalities as seconded by the North West Provincial treasury to assist with physical verification and unbundling of assets in 2012.

Application of asset related GRAP standards (17,16,12,100,19,21,31,103, etc) in the following municipalities Ditsobotla, Mamusa, Maquassi hills, Ngaka Modiri Molema from 2012 to 2015

• Assessment of remaining useful lives of assets and impairment of assets
• Determining and aligning various classes of assets in the register
• Evaluation of audit evidence obtained, and conclusions reached
• Finalisation of audit and signing off audits
• Preparation of management reports and reporting to management
• Performance management audit

• Physical verification and labelling of all assets of the college (all six (6) campuses including the Corporate Centre) to ensure completeness and existence of Property, Plant and Equipment.
• Assign and effect a unique asset identification number by bar-coding and capturing new asset not included in the current fixed asset register.
• Assigning and effect a unique asset identification number by bar-coding and capturing asset with lost/missing (including fallen and replaced) bar codes.
• Where assets do not have historical costs, fair value/deemed cost are to be determined
• Reconcile Capital Work in Progress noting amounts that require capitalisation and unbundling.
• Total values payments on the project be reconciled with payment vouchers
• Preparation of reconciliation between assets register and general ledger and post adjusting journals required.
• The re-assessment of useful lives, residual values and depreciation method
• Calculations of adjusting journals for the re-assessment of useful lives, residual values and depreciation method.
• Assess all the assets for indicators of impairment and compute their recoverable amounts
• Provide detail methodology applied for the assessment and impairment of assets where applicable; identification, measurement and recording of possible impairment losses and write-offs.
• Review assets that have reached an RUL of 2 years and physically verify them, to assess their conditions.
• De-recognise assets in the FAR and compile a list of assets to be disposed
• Investigate and correct prior year error
• Review payment voucher for possible misallocation of asset payment.
• Prepare audit file with supporting document for all adjustments made including additions.
• Running od depreciation on system for both prior and current year assets
• Review all reconciliations

Audit Support

• Remain on the premises of the college fot the entire project until audit is complete
• Attend audit steering committee meeting and respond to/advise the college of audit/AFS issues
• Respond to auditors request for information and queries
• Aid during the audit process, including accompanying auditors on verification and sire visits.

Asset Management Methodology

Our approach in asset management will be executed under the following steps:

• Physical verification and barcoding of assets
• Identification of asset additions for 2022 & 2021 with supporting documentation
• Recognition of assets
• Measurement of assets after recognition
• Valuation
• Depreciation
• Impairment
• Residual values

Asset Verification Procedure

All known rooms are visited and all assets within those rooms are verified using a mobile computer with the asset verification software, a condition assessment is also done at the same time.

Step 1: Data Captured during verification

• Photo of asset
• Condition Assessment Score Card (New, Good, Fair, Poor, Very Poor)
• Asset Classification
• Asset Description
• Make
• Model
• Serial Number
• Site Name
• Building Name
• Room Barcode
• Asset Custodian
• Verification Date
• Asset Status (In Use, Redundant, Disposal)

Step 2: Exception reports  

The Journey mobile application generates takeons (new assets) & Unverified lists for each room that can be viewed on the mobile computer and the verification officer can review these and give comments.

• Take-ons – Verified Assets on the floor that does not exist on the current register.
• Unverified – Assets on the current register that was not verified on the floor.

All takeons and unverified asses are reported, investigated, comments such “lost, stolen, disposed, barcode replaced” is then noted.

Step 3: Inventory List Sign-Off

Inventory lists for each room are produced and inspected by the asset custodian; any changes requested are then affected. Once complete and correct the final inventory lists where signed off by the custodian and pinned-up behind the room door.

The asset custodians are requested to check:

• Asset Condition Assessed
• Completeness of scanned list
• Other relevant information

Step 4: Verified data applied to asset register

• The verified data is then approved on the JOURNEY system and the current register is updated with the verified data.
• Reports can be generated to indicate approved asset data changes between current register and approved verification data.
• Takeons identified (if any) are then reconciled with current year additions and the remaining gains are then recognised at a depreciated replacement cost (See the section on Asset Recognition).

• Takeons identified (if any) are then reconciled with current year additions and the remaining gains are then recognised at a depreciated replacement cost (See the section on Asset Recognition).

Value in use

Value in use is the present value of the asset’s remaining service potential and is determined using the depreciated replacement cost method. This is the only measure that is applicable to this college since all its items of property, plant and equipment are all classified as non-cash generating assets as described above.

Depreciated replacement cost

Depreciated replacement cost is the current cost that will have to be incurred to replace the asset and then this amount is depreciated to reflect the asset’s current age and condition.

The current replacement cost is obtained from the following sources:

• If there was a purchase in the last 6 months of the same asset by the entity
  • The invoice of that purchase is used to determine the current replacement cost.
• If there has been no purchase in the last 6 months of the same asset by the entity
  • A quotation is obtained from a reputable supplier for the current purchase price.

The RUL and EUL of the asset being impaired are obtained from the current asset register.

Fair value less cost to sell

The fair value less cost to sell is obtained from the sale of the asset in an arm’s length transaction between knowledgeable, willing parties, less cost of disposal.

In the college’s environment land and buildings are not sold and therefore a reliable estimate of infrastructure asset’s fair value cannot be obtained. The recoverable service amount of these assets will be the depreciated replacement cost.

Fair value less cost to sell is obtained from the following sources:

• Selling prices in any sale agreements of the asset or of similar assets;

If there is an active market the prices is obtained from the market. Sources could include the internet and/or newspapers

Methodology For Reassessment Of Remaining Useful Life

At each reporting date the assets are physically verified, a condition grade is assigned to each asset. The remaining useful lives are reassessed based on these condition grades.

Indicators For Individual Assessment

When any of the following indicators exist on components making up at least 30% of the total cost of an item of property, plant and equipment, then the components of the facility will be individually assessed.

• Is there any indicators of impairment; or
• Had the components been replaced during the reporting period; or
• Had there been major repairs during the reporting period

Condition Grades

Note: If an asset is assessed as broken (rating of 6), it is assessed to have no remaining useful life.

Remaining Useful Lives

Remaining useful lives of assets of Ekurhuleni West TVET College were assessed at year end using the methodology documented in this document. The assessment was done for the 2021 financial year.

Residual Values

As part of the purification process a review and recommendation of appropriate residual values for the assets of the college was made, where applicable. 

Since college does not have significant record of actively disposing of assets for a return (money flowing in) no residual value is evident. This is in accordance with the ASB Frequently Asked Question number 2.2:

Must an asset always have a residual value?

No, an asset does not always have a residual value. There are also different requirements for residual values of tangible assets and intangible assets.

For tangible assets, such as property, plant and equipment or investment property, an asset only has a residual value when the useful life of an asset (the period the asset is used or available for use by the entity) is shorter than the economic life of an asset (the period(s) the asset is used or available for use by all users or owners of the asset). As entities in the public sector often plan to use an asset for its entire economic life, the residual value may be negligible or even zero.

For intangible assets with a finite useful life, the residual value is always deemed to be zero unless:

(a) a third party has committed to purchase the asset at the end of its useful life; or

(b) there is an active market for the asset and:

(i) the residual value can be determined by reference to that market; and

(ii) it is probable that such a market will exist at the end of the asset’s useful life.

Depreciation Method

The depreciation method used by the college will be reviewed at year end in line with the documented methodology. This did not result in change in the method. The college  concluded that the straight-line method of depreciation still is the best reflector of the way economic benefits derived from the use of assets are consumed and therefore depreciation is applied on such method.

VALUATION ASSET REGISTERS

The most important first step in the implementation of the asset management process is the generation and establishment of asset knowledge and the presentation thereof in comprehensive and accurate asset registers per asset class.

Asset register: A record of information on each asset that supports effective financial and technical management of the assets, and meets statutory requirements.

Valuation Asset Registers (VARs)

• All asset components physically verified and conditions assessed and graded.
• Asset criticality captured
• Asset location captured and plotted
• System : Asset Management System (AMS)
• System : Pavement Management System (PMS)