Method of depreciation Acquisition, disposal and transfers – Transactional Audit trail Management & Risk – How is it managed? Identification of Fixed Assets The Chief Financial Officer shall ensure that the municipality maintains a fixed asset identification system which shall be operated in conjunction with its computerised fixed asset register. The identification system shall be determined by the Chief Financial Officer, acting in consultation with the municipal manager and other heads of departments, and shall comply with any legal prescriptions, as well as any recommendations of the Auditor-General as indicated in the municipality’s audit report(s), and shall be decided upon within the context of the municipality’s budgetary and human resources. Every head of department shall ensure that the asset identification system approved for the municipality is scrupulously applied in respect of all fixed assets controlled or used by the department in question. All heads of department under whose control any fixed asset falls shall promptly provide the Chief Financial Officer in writing with any information required to compile the fixed asset register, and shall promptly advise the Chief Financial Officer in writing of any material change which may occur in respect of such information. A fixed asset shall be capitalised, that is, recorded in the fixed assets register, as soon as it is acquired or is determined to be at a stage or condition where it is practically complete and may deliver the required levels of service. If the asset is constructed over a period of time, it shall be recorded as work-in-progress (WIP) until it is available for use, where after it shall be appropriately capitalised as a fixed asset. A fixed asset shall remain in the fixed assets register for as long as its physical existence can be verified and the asset is able to provide some level of service. If a fixed asset has been fully depreciated, this asset shall not be written off or impaired in totality unless the asset may no longer deliver a service and the asset cannot be refurbished to a state where it could provide or deliver a service(s). If an asset can deliver or provide a service then the asset must be revalued in terms of the fair value to replace an asset of similar condition and remaining economic life. Classification of Fixed Assets In compliance with the requirements of the National Treasury, the Chief Financial Officer shall ensure that all fixed assets are classified under the following headings in the fixed assets register, and heads of departments shall in writing provide the Chief Financial Officer with such information or assistance as is required to compile a proper classification: Property, Plant and Equipment
A detailed classification of asset types, in accordance with the above hierarchy and data template definitions, has been provided in Annexure 3 of this document and should be used to classify and structure asset register data. Componentisation Componentisation is the process by which asset register details are ‘expanded’ to refer to part(s) of an asset which have a significantly different useful life or cost in relation to the parent asset. The Municipality, in consultation with Vela VKE Engineers, have identified the level of detail for collection purposes and as such componentisation has been defined according to these levels. The hierarchy definitions as shown in Annexure 3 are to be used for inspection and asset reporting purposes and are to be reflected in the Fixed Asset Register (FAR) as well as in vSMART, Vela VKE’s Computerised Asset Management System. The fixed asset register shall be maintained in the format determined by the Chief Financial Officer, which format shall comply with the requirements of generally recognised accounting practice (GRAP) and any other accounting requirements which may be prescribed. The fixed asset register shall reflect the following information: Description of each asset; Asset Type; Facility Type; Cost Code; GIS ID; Remaining useful life; Condition Index; Photograph(s) of the asset; Location Of Asset (co-ordinates in terms of WSGS84); Manager responsible for the asset; Title Deed Number; (in the case of Land/Property assets) Stand (Erf) number; (in the case of Land/Property assets) Acquisition Date; Original Cost; Expected Useful Life; Current Replacement Cost; Source of Finance; Whether or not Asset used to secure Debt; Revaluation Date of Assets subject to revaluation; Who did valuation; Revalued Amount; Depreciation Method; Rate of Depreciation; Residual/Scrap Value;
Accumulated Depreciation to Date; Condition assessment; Remaining Useful Life; Asset Impairment Losses; Depreciation charge for year; Carrying Value of Asset; Date Asset disposed of; Disposal Price; Asset Specific Identifiers and Descriptors The table below depicts a few of the fields recommended by the Local Government Capital Asset Management Guidelines compiled by National Treasury. In addition the table provides typical examples of the attribute as guidance when compiling the Fixed Assets Register; Table 2: Asset Identification Attributes Attribute Description Example Asset hierarchy As Per Asset Tree > Community Assets > Market > Church Square Market > Landscaping > Paved Areas/Walkways Asset Name Name of Asset Church Square Market Category Asset Type Paved Area Description Description of Asset Parking Lot Status Could be: Active, Decommissioned, Under Construction Active Physical Address/ Location of Asset Or From GIS/GPS 50 Business SQ, Westcliff, Chatsworth Property ID/ Title Deed Number From Valuation Role N0FT00520000010600000 Property Key/ Stand Number From Valuation Role 1531346 X Location From GIS/GPS -3310255.302 Y Location From GIS/GPS -100604756364.00 Construction Date Same as "Acquisition Date" 1990/06/30 Expected Useful Life Same as “ Design Life” 20 Structural Condition Index From Inspections 73.6% Method of Depreciation Always Straight Line Straight Line Depreciation Rate Inverse of “Expected Useful Life” 5%
Building - Floors Building - Internal Fabric Building - Roof Buildings Building - Drainage Building - Electrical Building - External Fabric Building - Floors Building - Internal Fabric Building - Roof Building - Wet Services Elevated Tanks Water - Tank round Water - Tanks - Pipework Fence Fence/wall - Fabric Grass Field Sports - Goal Post Sportsfield - Grass Ground Mounted Tanks Water - Tank Foundation Water - Tank round Water - Tanks - Pipework Standalone Toilet Building - Wet Services Standalone Toilet Toilet - Foundation Electricity Lighting Street Lighting Electrical Network Electrical - Distribution Pole Electrical - Overhead cable Electrical Transformer Electrical - Transformer Fence Fence/wall - Fabric Miscellaneous structures Concrete Foundation Dish - TV Electrical - General Structures - Minor Substation Buildings Building - Drainage Building - External Fabric Building - Floors