Asset Policy Ratified: 7 January 2019

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1 Asset Policy 1. Purpose Assets purchased by, bequeathed to or donated to Inala Community House represent a significant investment. These assets need to be prudently managed and properly documented to enable sound management decision-making, prevent abuse or misuse, and meet regulatory reporting and accounting compliance requirements. This policy sets out the mandatory obligations and responsibilities for asset management in Inala Community House (ICH). 2. Scope The policy applies to all Inala Community House staff, Board members, volunteers, students, trainees, and contractors in respect of all assets as defined. For the purposes of this policy, all these persons shall be referred to as workers. 3. Definitions Asset: Any item owned or controlled by Inala Community House, and of economic value, with an expected useful life of 12 months or more. An asset can be physical or tangible (e.g. land, buildings, plant, equipment, motor vehicles) or intangible (e.g. computer software). The key features are that: it is a resource controlled by ICH; there was a past transaction or event which gave rise to the control by ICH; and there must be future economic benefits expected to flow to ICH. Asset Recognition Thresholds: ICH has the discretion to determine the asset recognition thresholds in consultation with their external auditors. The current agreed recognition threshold is as follows: If the cost of the purchased item is above $300, it is recognised as non-current asset ; If the cost is below $300, it is recognised as low-cost equipment. The items below $300 are not recognised as an ICH asset and will not be addressed in this policy. 4. Policy 4.1 Worker Responsibilities ICH provides workers with assets for the purpose of providing services to clients and the community, and for performing work in accordance with organisational needs. Workers are expected to use and care for the assets in a way which maximises the life of the asset. Use of all assets shall be in accordance with ICH policies and procedures. When workers request to purchase an asset, they need to notify their Manager by , specifying the asset and the reason for the purchase. The Manager shall then submit the application to the Chief Operating Officer. The Chief Operating Officer may approve the purchase subject to an evaluation of the necessity of the asset and budget availability. 1 P a g e

2 It is the workers responsibility to notify Finance by , whenever: an asset is transferred to another ICH location. Any consequential Asset Register and General Ledger adjustments are the responsibility of the Finance Department. There is a change to a key element of the asset, such as its value, substantial changes to the useful life such as damage, asset details or location. Workers may be permitted to take ICH owned assets offsite for work purposes on a temporary basis. This must be authorised by the Manager prior to removing the asset from the site. Any approvals will be granted with the understanding that the asset remains the property of ICH and the use of the asset remains subject to any relevant ICH policies and procedures. Assets may be disposed for multiple reasons, it is the responsibility of workers to notify their Manager by prior to the disposal of any asset. The Service Manager then will seek Chief Operating Officer s approval for disposal. The Chief Operating Officer will advise the Manager of the approved method for disposal. Service Managers must advise the Finance Department of any changes to the assets. 4.2 Finance Department Responsibilities Initial Recognition of Assets The circumstances resulting in the initial recognition of assets include: acquisitions involving consideration (the agreed amount which ICH pays to the vendor in exchange of the ownership of the asset); donation or bequest irrespective of cost to the person making the donation or bequest; recording of assets not previously recognised Initial Purchases Costs Capitalised The following costs are included in the cost of an item of property, plant and equipment upon initial purchase or construction and are capitalised: the purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates; the amount of GST relevant to the purchase of fixed assets is to be allocated to the GST Capital Acquisition Account; any costs directly attributable to bringing the asset to the location and condition. Examples of directly attributable costs include: o costs of site preparation; o initial delivery and handling costs; o installation and assembly costs; o costs of testing whether the asset is functioning properly (after deducting the net proceeds from selling any items produced while bringing the asset to that location and condition, such as samples produced when testing equipment); and o professional fees. All expenditure related to a specific accounting period, such as repairs and maintenance, must be treated as an expense and matched against the revenue for that period. 2 P a g e

3 4.2.3 Asset Register An asset register is a list of assets that belong to ICH and the depreciation calculation. The main purpose of an asset register is to keep track of the book value of the assets for management purposes, enhancing accountability and meeting accounting compliance requirements. Each register is to include the following information: Description of Asset Asset Location Purchase Value Date of Acquisition Date of Disposal Serial /Model Number (if relevant) Depreciation For accounting purposes, capitalised asset acquisitions are recorded at cost, and depreciated using the following principles: land is not depreciated; depreciation on property, plant and equipment is on a diminishing value basis, in order to write off the net cost or other re-valued amount of each asset over its expected useful life; general ledger journals must be prepared to record the amount of depreciation; a note must be disclosed on the Statement of Financial Position if ICH changes its depreciation method (e.g. from diminishing value to straight line) Disclosure Requirements The details of each asset are recorded on the Asset Register and recognised as non- current assets on the Statement of Financial Position according to AASB 116 and AASB 101. The audited Statement of Financial Position is included in ICH annual report which is published prior to AGM Insurance All ICH s properties and equipment are covered by insurance through licensed insurance brokers and ICH vehicles shall be covered by comprehensive insurance. The Chief Operating Officer is the main contact for any insurance issues Stocktake Stocktakes of all property, plant and equipment will be undertaken (as determined by the Chief Operating Officer) to ensure that loss and theft are minimised. Missing items are to be reported to the Managers who will then inform the Chief Operating Officer. The Chief Operating Officer of Inala Community House, after investigation which shall be adequately documented, shall: 3 P a g e

4 notify the police and the insurance company where there is the possibility of malfeasance or theft. notify the insurance company where there is a substantiated loss of material value that exceeds the excess and impact on the premium paid by ICH for the insurance Disposal of Assets An asset can be disposed of, after getting proper authorisation from the Chief Operating Officer, if it meets one or more of the following criteria, it: no longer complies with work health and safety standards; has been superseded by a new technology, design or functionality; is no longer required because of changed procedures, functions or usage patterns; is reaching optimum selling time which will maximise returns; is beyond repair but can be sold for scrap; is in storage and will not be used in the foreseeable future; or can be recycled more economically than it can be stored. ICH assets can be disposed in two ways: Disposal of assets by write-off o If the asset is fully depreciated, reverse any accumulated depreciation and reverse the original asset cost; o If the asset has not yet been completely depreciated, then write off the remaining undepreciated amount of the asset to a loss account. Disposal of assets by sale o Loss on sale: debit cash for the amount received, debit all accumulated depreciation, debit the loss on sale of asset account, and credit the fixed asset; o Gain on sale: debit cash for the amount received, debit all accumulated depreciation, credit the fixed asset, and credit the gain on sale of asset account Recording and Record Keeping The Chief Operating Officer shall provide management information on ICH assets to the Managing Director and/or the Board, including notifying Finance of any authorisations granted within the scope of this policy. The Managing Director shall be advised of all changes to assets at least quarterly. The Board shall be advised of all disposal of assets of significant value and advised of all changes to assets at least annually. The Finance Department shall: Maintain the Asset Register and ensure that the assets are capitalised in accordance with Australian Accounting Standards; Ensure the Asset Register and General Ledger are updated when there are changes to an asset; 4 P a g e

5 Respond in a timely manner to the requests from the Chief Operating Officer in respect of asset reconciliation and stocktake. 5. Related Documents Asset Register and Depreciation Schedule Asset Register Procedure Australian Accounting Standards Board (AASB) AASB Property, Plant and Equipment- August 2015 AASB 101- Presentation of Financial Statements- July 2015 AASB Amendments to Australian Accounting Standards - Recoverable Amount of Non-Cash- Generating Specialised Assets of Not-for-Profit Entities - June P a g e