BACKGROUND
PURPOSE
that the municipality has and maintains a management, accounting and information system that keeps records of the municipality's assets and liabilities; that the municipality's assets and liabilities are valued according to GRAP standards; and.
DEFINITIONS
Recoverable amount is the amount that the municipality expects to recover from the future use of an asset, including its residual value upon disposal. The period over which an asset is expected to be used by the municipality; or.
LEGISLATIVE CONTEXT
Residual value is the net amount that the municipality expects to obtain for an asset at the end of its useful life, after deduction of expected disposal costs. The number of production or equivalent units that the accounting officer of the municipality expects to extract from the asset.
SCOPE FOR APPLICATION
RESPONSIBILITIES
As accounting officer of the municipality, the Municipal Manager is responsible and liable for, among other things, all assets of the municipality (section 55(2) of the MSR). The Municipal Manager must take all reasonable steps to ensure, among other things, that the resources of the municipality are used effectively, efficiently and economically (section 62(1) of the MFMA).
POLICY FRAMEWORK
ASSET RECOGNITION
These unique numbers are registered in the asset register together with the asset's unique identification. Data related to each asset should be able to be stored in the asset register.
ASSET TYPES
CFO will ensure that all infrastructure assets are re-evaluated in terms of municipal policies. The CFO, in consultation with department heads, will ensure that all other assets are adequately recorded in accordance with municipal policies. The CFO, in consultation with department heads, will ensure that all intangible assets are adequately recorded in accordance with municipal policies.
Investment properties must be booked in accordance with GRAP 16 and must not be classified as PPE for the purpose of preparing the municipality's statement of financial position. The fair value of investment properties is calculated annually on the balance sheet date in accordance with the municipality's accounting practices. The CFO ensures that assets held for sale are registered in the asset register in the same way as other assets, but a separate part of the asset register is kept for this purpose.
Inventory Land and buildings must be booked as inventory and not included in either PPE or investment properties in the municipality's statement of financial position. Smaller assets must be expensed in the income statement and not capitalized. The CFO ensures that minor assets are registered in the asset register in the same way as other assets, but a separate part of the asset register is kept for this purpose.
ASSET ACQUISITION
The asset is suitable for the task or requirement and is cost-effective over the life of the asset. Work in progress is marked as such in the asset register until the provision is delivered. Depreciation begins when the construction of the asset is complete and the asset is in the condition necessary to function in the manner intended by management.
Heads of departments should ensure that a form is completed and submitted to the Asset Control Department which includes details of the work in progress relating to the work in progress. Heads of departments will notify the Asset Control Unit when the work has been completed and the assets can be identified. Heads of departments will instruct the service provider to submit work-in-progress invoices by component and asset classification as in the asset register.
All assets listed by the municipality must be registered in the asset register and depreciated over its estimated useful life for the relevant category of assets. Depreciation begins when construction of the asset is complete and the asset is in the condition necessary to function in the manner intended by management. Donated assets must be valued at fair value, reflected in the asset register and depreciated as normal assets.
ASSET MAINTENANCE
The CFO must ensure that remaining useful life and changes thereof are correctly registered and posted in the asset register and the general ledger. The CFO must ensure that residual values and changes thereof are correctly registered and posted in the asset register and the general ledger. Each department manager must determine the reasonable useful life of the asset classifications under their control.
The CFO ensures that the depreciation is updated monthly and is reconciled between the asset register and the general ledger. The recoverable service value is the higher of the asset's value in use or net selling price. If the asset is carried at a revalued amount (in the case of investment property, infrastructure and community assets), the impairment should be recorded as a.
The CFO must ensure that write-downs or reversals thereof are correctly registered and posted in the asset register and the general ledger. Maintenance actions performed on infrastructure assets must be recorded against the individual assets individually identified in the asset register. The replacement value must be capitalized against the asset and the asset's expected life adjusted to reflect the new life of the asset.
ASSET DISPOSAL
If the acquired asset is not measured at fair value, its purchase value is measured at the book value of the given asset. The cost of assets acquired in exchange for another asset is measured at the fair value of the asset received, which is equal to the fair value of the asset given, adjusted for the amount of any cash or cash equivalents transferred. When assets are disposed of, the CFO writes off the corresponding assets in the asset register.
The notification of the municipality's intention to sell the property is published in the local newspaper. When the assets are sold, the CFO writes off the corresponding assets in the asset register. If the sales revenue is less than the book value recorded in the asset register, such difference is recognized as a loss for the concerned department or vote in the financial performance statement.
If, on the other hand, the proceeds from the sale are greater than the book value of the asset in question, the difference must be recognized as a gain for the department or vote in question in the income statement. Asset write-off is the process of permanently removing the assets from the asset register. An asset, even if fully depreciated, must only be depreciated on the recommendation of the department manager who controls or uses the asset in question and with the approval of the municipal manager.
ASSET PHYSICAL CONTROL
If surpluses or shortages are found, the certificates are treated as with stock reports. In the event of non-compliance with the requirements of a transfer certificate, the person who takes over is liable for any defects, unless it can be established that the defects existed before the takeover. Any loss or damage to equipment, with the exception of discrepancies in inventory losses due to normal delivery or fair wear and tear, must be reported to the CFO.
Independent reviews of asset records are conducted to ensure that assets physically exist, particularly those that could be disposed of without appreciable impact on the business. Annual physical inspections of assets should be conducted to identify items that are damaged, out of service, or obsolete due to changed circumstances to ensure they are properly repaired, written off, or disposed of. The purchasing department marks all newly acquired assets with a barcode and the person requesting the asset signs that they are taking it over.
In terms of value and content, material resources must be insured at least against destruction, fire and theft. If any biological asset is lost, stolen or destroyed, the matter shall be reported in writing to the appropriate department head in exactly the same manner as if it were a normal asset. Borrowing costs are capitalized if they are related to the construction of the asset, when the construction of the asset is expected to take a significant period of time to be ready for its intended use or resale, and an external agency is used to finance the project.
PRINCIPLES OF ASSET MANAGEMENT
POLICY PRINCIPLES
The municipality strives to promote social and economic development in its municipal area by providing municipal services in a manner that meets the needs of the various customer user groups in the community. The municipality strives to be a responsible custodian and guardian of the community's assets for present and future generations. Establish a spatial development framework that takes note of the affordability for the municipality of various development scenarios;.
Develop an attitude of responsible use and maintenance of its assets, in partnership with the community. The municipality strives to manage its real estate transparently for all its customers now and in the future. Develop and maintain a culture of regular community consultation regarding property management in support of service delivery.
Continuously develop the skills of Councilors and Officers to communicate effectively with the community regarding service levels and standards. Regularly review the actual scope, nature, utilization, criticality, performance and condition of fixed assets to optimize planning and implementation efforts. Assess and implement the most appropriate maintenance of infrastructure assets to achieve the required network performance standards and to achieve the expected useful life of fixed assets.
RELATED POLICIES
REVIEW
EFFECTIVE DATE
