PREAMBLE
KEY DEFINITIONS
The recoverable amount is the higher of the net selling price of a cash-generating asset and its value in use. The period during which an asset is expected to be used by the municipality; or.
OBJECTIVE
The members of the fund management committee established in accordance with paragraph 1 must be appointed in writing by the accountant. Ensuring the use of funds for the purpose for which the municipality acquired them.
POLICY FRAMEWORK
ASSET RECOGNITION
Classification of Assets
Identification of Assets
Asset Register
The CFO must determine the format of the Asset Register in consultation with the Head of Departments and must ensure that the format of the Asset Register complies with legislative requirements. The Head of Departments must provide the CFO with the information required to compile and maintain the Asset Register.
RECOGNITION OF ASSETS: INITIAL MEASUREMENT
The Asset Management Committee must ensure that there is a defined process and forms for updating and maintaining the Asset Register. The Head of Departments will also ensure that any assets under their control identified as critical, other than those asset categories already identified as such in Appendix B, are included in the Asset Register by reporting these assets to the Management Committee Assets. Only costs constituting the purchase price and any directly attributable costs necessary to bring the asset to its working condition should be capitalized.
In such a case, the municipality should capitalize the purchase value of the asset together with VAT. Employee benefit costs (as defined in the applicable employee benefit standard) arising directly from the construction or acquisition of an asset. Costs incurred in the maintenance or re-establishment of an asset, which ensures that the asset's useful life is reached, are considered operating expenses and are not capitalized, regardless of the amount of the costs involved.
The time will be priced at recognized professional fee scales and must be included in the capitalization cost of the asset.
SUBSEQUENT MEASUREMENT OF ASSETS
RECOGNITION OF INVENTORY ITEMS (NON CAPITAL ITEMS)
The cost of inventory consists of all purchase costs (ie purchase price, import duties, other taxes and transportation, handling and other costs attributable to the acquisition of finished goods, materials and supplies), development costs, processing costs and other costs. incurred in bringing inventory to its current location and condition. The cost of building apartments or similar buildings that are acquired or developed for resale will include costs directly related to the construction - e.g. Included are the service provider's inventory costs, which consist of direct labor and other costs of personnel directly performing the service, and other related overhead costs.
Assets acquired or owned by the municipality with the intention of selling such assets or developing them with the aim of selling them or using the asset in the production process or in the provision of services must be included in the municipality's financial statements as inventory items and not as property, plant and equipment. The amount of the cost of inventory must be recognized and carried forward until related revenue is recognized. 2 Consumption in the production process of goods to be distributed free of charge or at a nominal charge.
In cases where the above does not apply, inventories are measured at the lower of cost or net realizable value.
ASSET TYPES
- Property, Plant and Equipment: LAND AND BUILDINGS
- Property, Plant and Equipment: INFRASTRUCTURE ASSETS
- Property, Plant and Equipment: OTHER ASSETS
- HERITAGE ASSETS
- Intangible Assets
- Investment Property
- Minor Assets (Assets Below Approved Threshold)
The Asset Management Committee determines the level of detail of the Infrastructure Asset Register in consultation with the head of department. The Asset Management Committee, in consultation with the head of department, ensures that all other assets are properly recorded within the framework of municipal policy. For reporting purposes, the existence of such heritage assets shall be disclosed through an appropriate entry in the asset register.
The Asset Management Committee, in consultation with the head of department, ensures that all intangible assets are properly recorded in the context of municipal policy. The fair value of investment properties is determined annually at the reporting date in accordance with the municipality's accounting policies. Minor assets are expensed in the statement of financial performance and not capitalized.
The Asset Management Committee will ensure that minor assets are recorded in the Asset Register in the same way as other assets, but a separate section of the Asset Register will be maintained for this purpose.
ASSET ACQUISITION
- Acquisition of Assets
- Creation of New Infrastructure Assets
- Self-constructed Assets
- Donated Assets
Work in progress will be recorded as such in the Property Register until the facility is completed. Depreciation will begin when construction of the asset is complete and the asset is in the condition necessary to operate in the manner intended by management. All properties that can be classified as assets and that have been built by the municipality must be registered in the Property Register and depreciated during the useful life provided for that category of assets.
Depreciation will begin when the asset is in the condition necessary for it to function in the manner intended by management. Donated assets should be valued at fair value, reflected in the Asset Register and depreciated as normal assets. All donated assets must be approved by the Asset Management Committee and ratified by the Council prior to acceptance.
Municipal officials must inform the Asset Management Committee of any donation made to the Municipality.
ASSET MAINTENANCE
- Useful Life of Assets
- Residual Value of Assets
- Depreciation of Assets
- Impairment Losses
- Maintenance of Assets and the Asset Register
- Renewal of Assets
- Replacement of Assets
The CFO must ensure that residual values and changes thereof are correctly registered and posted in the asset register and the general ledger. The Asset Management Committee must ensure that the residual value of an asset is reviewed at each reporting date. The department manager must determine the reasonable useful life of the asset classifications under their control.
The Asset Management Committee must be informed of the additional asset classification and amend the Asset Management Policy accordingly. The recoverable amount of the service is the value of the asset in use or its net selling price, whichever is higher. The CFO ensures that impairment losses or reversals are properly recorded and recorded in the asset register and general ledger.
Performed maintenance actions on infrastructure assets are recorded according to individual assets, which are individually identified in the asset register.
ASSET DISPOSAL
- Transfer of Assets
- Exchange of Assets
- Alienation / Disposal of Assets
- Selling of Assets
- Writing-off of Assets
The Asset Management Committee must approve all asset exchanges in consultation with the relevant Head of Department. Controlled dumping (for items that have a low value or are unsanitary) Assets withheld must be written off in the Asset Register. The Council shall delegate to the Asset Management Committee the power to approve the disposal of any asset.
A request to sell assets must be submitted to the Asset Management Committee for approval. The CFO may authorize an ad hoc write-off of funds without prior approval of the Fund Management Committee provided that. The Asset Management Committee is informed about write-offs at the next regular meeting of the Asset Management Committee.
The CFO will consolidate all such reports and promptly submit a recommendation to the Asset Management Committee for the assets to be written off.
ASSET PHYSICAL CONTROL
Physical Control / Verification
The only reasons for depreciating assets, other than the sale of such assets in the process of disposal, are loss, theft, destruction, material impairment or dismantling of the asset in question. An asset, even if fully depreciated, is depreciated only on the recommendation of the HOD that manages or uses that asset and with the approval of the Asset Management Committee. In any event where an asset that is not fully depreciated is written off without revenue being received for the asset, the CFO will immediately debit this department or vote the entire carrying amount of the affected asset as an impairment charge.
If the person from whom the asset is being taken over is not available for any reason, the manager must assist the taker in inspecting the equipment and confirming any discrepancies. All losses and damages to equipment, other than discrepancies in the loss inventory resulting from normal handling or reasonable wear and tear, must be reported to the Asset Management Committee. The Asset Management Committee may, at the request of HOD, waive full physical verification and accept written confirmation from HOD of infrastructure assets that are verified during the financial period as part of regular and/or scheduled maintenance and/or physical inspections.
The Chief Financial Officer will inform the external auditors of the Asset Management Committee's decision.
Insurance of Assets
If surpluses or defects are found, the certificates are treated as inventory reports. If the requirements of a delivery certificate are not met, the transferee is liable for any shortcomings, unless it can be established that the shortcomings already existed before the takeover. Independent audits of asset records must be made to ensure that the assets physically exist, especially those assets that can be disposed of without an appreciable effect on the business.
Annual physical inspections of assets are performed to identify items that are damaged, out of use, or obsolete due to changed circumstances, to ensure they are properly repaired, depreciated, or disposed of.
Safekeeping of Assets
Directives for safekeeping of assets must be developed and safekeeping of assets must be actively managed. Malicious damage, theft and burglary must be reported to the CFO within 48 hours of its occurrence or awareness.
ASSET FINANCIAL CONTROL
Borrowing Costs (GRAP 5)
The CFO must reconcile the borrowing costs to be capitalized with the amount that was capitalized on a monthly basis.
Funding Sources
IAR Infrastructure Asset Register IAS International Accounting Standards IDP Integrated Development Plan MFMA Municipal Finance Management Act.
