4.7 Asset management policy and procedures guide

Physical security and control of assets

An asset management policy and procedures guide (AMG) should outline the operational requirements for entity staff who are responsible for the management or control of publicly owned assets, including matters such as loans, personal use and removal of assets for repair.

The AMG should address the requirements of the Commonwealth Protective and Information Security Manuals including protective security policy, information security, personnel security and physical security, which will assist in safeguarding an entity's assets. Standard operating procedures should be developed for all aspects of security including:

  • electronic access controls, building pass and identity documents;
  • security infrastructure such as security alarms, management of keys and combinations, security lighting, CCTV, guard posts and services and communications;
  • equipment such as security shredders, access control computers and encryption devices; and
  • security awareness training.

Portable and attractive items

A risk assessment will assist in establishing the likelihood and consequence of loss, misuse or misappropriation of portable and attractive items. Where the risk is assessed above low, registers and stocktakes can be used to track and provide control over physical security. These items are usually expensed on acquisition.

Gifting of public property

There are limited circumstances where an appropriate entity delegate, as a delegate of the Finance Minister, may approve an asset to be used as a gift or donation. Examples include the purchase of gifts in the process of providing official hospitality or the gifting disposal of surplus or obsolete assets to community groups.

All gifts are to be recorded in a gifts register and there are annual reporting requirements to the Finance Minister regarding all gifts made during the reporting period.

Stock-takes

A stock-take is an important internal control mechanism that reconciles the asset register, to confirm it is a complete and accurate record of an entity's physical asset holdings. Unreconciled differences should be subject to investigation and follow-up of exceptions.

A stock-take can be used to:

  • verify the physical existence and completeness of assets recorded on the asset register;
  • review current useful lives and consider asset condition and asset performance indicators such as functionality, criticality and utilisation;
  • review inventory levels and adherence to inventory management guidance;
  • verify the proof of licence for software assets and that software assets are being used according to the terms and conditions of the licence; and
  • assess the accuracy of details recorded on the asset register.

For entities with large asset or inventory levels, an efficient facilitation method involves bar-code labels which can be attached to each asset when first available for use. The stock-take can then be conducted efficiently through the use of bar-code scanners that download results back to a central data repository.

The results of stock-takes, including remedial action on exceptions, should be signed off by a suitable delegate, often a senior official from the entity's financial services group.

Potential list of AMG topics

The following check-list provides guidance on potential topics that can be included in an AMG. Entities may need to tailor the AMG to suit their particular circumstances by focussing on those aspects that are most relevant.

Table 4.6: Asset management policy and procedures guide checklist

Repairs and maintenance

Heading Section Component
Asset management framework

Overview and scope

  • Principle objectives of asset management including the creation and maintenance of an asset portfolio that contains an optimal mix of assets to meet service delivery needs.
  • An overview of the inter-relationships between the asset management guide and other components of the asset management framework that link the asset portfolio with the entity's strategic intent and service delivery needs. This will include key inter-relationships with the asset management strategy, risk management strategy, capital management plan and capital budgeting process.
  • Key stakeholders both internal and external.
  • How the AMG will be communicated and made widely available.
  • The AMG's review and update process.
Roles and responsibilities
  • Roles and responsibilities over all aspects of asset management including asset planning, budgeting, performance evaluation, operations and maintenance, accountability and disposal.

Legal requirements

  • The requirements of relevant legislation and other regulatory requirements.

Life-cycle approach

  • How an asset is managed over its useful life to understand the longer term implications of holding assets. Explanation of the phases of an asset's life-cycle: planning, acquisition, operation and maintenance and disposal.
Asset recognition

Asset definition

  • Define what constitutes an asset for recording purposes.

Asset thresholds

  • Rationale and consideration of materiality when setting asset thresholds, and process to change. Cost/benefit analysis to establish the appropriate threshold for individual and for group assets.

Asset groupings and classes

  • Define the classes of property, plant and equipment as being groupings of assets of a similar nature and use in an entity's operations.
  • Establish criteria for asset aggregation and grouping.

The asset register

  • Define the classes of property, plant and equipment as being groupings of assets of a similar nature and use in an entity's operations.
  • Establish criteria for asset aggregation and grouping.

Portable and attractive items

  • Where assets do not meet the asset threshold define criteria for recording portable and attractive items.
Asset acquisitions and divestment

Procurement process

  • Define processes for asset procurement and inter-relationships with service delivery options, asset management strategy acquisition plan and entity-specific procurement policies and procedures.
  • Define procedures for physical receipt and acceptance of assets and recording details in the Financial Management Information System (FMIS).

Non-asset solutions

  • Establish process for consideration of non-asset solutions such as outsourcing and demand management techniques.

Lease versus buy

  • Provide guidance on lease versus buy decision-making process.

Divestment

  • Define policies and procedures for divestment including guidance on how to identify surplus, obsolete or underperforming assets, how to select an appropriate disposal method, and the approval process required for write-offs, trade-ins, or sale to staff.
  • Link through to asset management strategy disposal plan.
Asset control and management

Stock-takes

  • Define stock-take responsibilities and requirements to:
    • verify the physical existence and completeness of assets recorded on the asset register;
    • assess the stock-take coverage between full count and reconciliation and cyclical coverage on the basis of risk profile and level of physical security;
    • review current useful lives and consider asset condition and asset performance indicators such as functionality, criticality and utilisation;
    • verify the proof of licence for software assets and confirm that software assets are being used according to the terms and conditions of the licence; and
    • assess the accuracy of details recorded on the asset register.

Authority and delegations

  • List the various authorities and delegations that may be exercised over an asset's life-cycle.

Personal issues and loans

  • The entity’s policies and procedures relating to personal issues and loans.

Losses and damages

  • Requirements to manage losses and damages including relevant delegations and responsibilities.

Insurance

  • The entity's policies and procedures to ensure all assets are appropriately insured.

Gifting

  • Policies and procedures on the acceptance of gifts and recording in a gifts' register.
  • Process of annual reporting requirements to the Finance Minister of all gifts made during the reporting period.

Repairs and maintenance

  • Roles and responsibilities for monitoring condition and use of assets and for initiating repairs and maintenance.
  • Link to the asset management strategy maintenance plan that defines the standard, level and frequency of maintenance.

Asset performance indicators

  • The framework for establishing, recording and monitoring asset performance indicators including how the entity evaluates asset performance.
Accounting for assets

Acquisition and disposal

  • Criteria and methodology for recording asset acquisitions including roll- out of assets under construction, capitalisation of internally developed software, assets received for no or for nominal consideration, finance leases and componentisation.
  • Accounting for subsequent expenditure on existing assets including part replacement of assets, enhancement, refurbishment and maintenance activities.
  • Define accounting requirements for asset disposal including meeting the requirements of AASB 5.

Transfers in/ out

  • Accounting for the transfer in and out of assets including through administrative restructuring arrangements.

Valuation

  • Define valuation cycles, methodologies and accounting requirements
  • Process for engaging independent expert valuers and/or use of in- house valuations.

Depreciation/ useful life

  • Set out the entity's policies on depreciation methods, useful lives and review processes.

Impairment

  • Establish review process for assessing the carrying value of assets for impairment.
  • Define typical impairment indicators including use of external and internal sources of information.

Heritage and cultural assets

  • Define recognition criteria, valuation and depreciation policies.
  • Guidance on how to determine whether curatorial and preservation policies support indefinite useful lives.