|Approved by||Chief Financial Officer|
|Date Procedure Took Effect||16 April 2002|
|Last Approved Revision||15 January 2019|
|Sponsor||Chief Financial Officer|
|Responsible Officer||Financial Controller|
|Review Date||1 July 2020|
These procedures provide a definition of an asset, how assets are to be recorded, their useful life and how they should be disposed of.
- Assets Officer - Financial Services Division Asset and Insurance Officer
- Finance One - University Corporate Financial System
1. Definition of an Asset
(a) All purchases of computers, including personal computers, Macintoshs, laptops, IPads and other similar tablet devices, are to be capitalised regardless of the purchase price. All equipment which comes with the computer and is required for the computer to operate, such as keyboard, monitor and mouse is deemed to be an integral part of the computer and is to be included in the amount capitalised.
(b) The University Policy for asset capitalisation is set at $2,000. Any purchase costing less than $2,000 is considered minor equipment (dissection 3321 for minor computer equipment, dissection 3216 for sundry minor equipment and dissection 3316 for minor software). Items paid for by instalment or purchased in parts should be considered in total for the purposes of capitalisation.
(c) The cost of repairing or replacing computer components and ancillary equipment such as keyboards and monitors is to be expensed (dissection 3321 or 3329) unless the cost exceeds $2000 and the expenditure increases the useful life of the computer to which it is related.
2. Classes of Assets
(a) The University classifies assets into the following categories:
i. Land (dissection 8841)
ii. Buildings (dissection 8842)
iii. Computers (dissection 8848)
iv. Furniture (dissection 8851)
v. Leasehold Improvements (dissection 8844)
vi. Library Books (dissections 8852 & 8857)
vii. Motor Vehicles (dissection 8849)
viii.Network Infrastructure (dissection 8845)
ix. Plant & Equipment (dissection 8846)
x. Software (dissection 8853)
xi. Rare Books & Special Library Collections (dissection 8855)
xii. Artworks (dissection 8856)
(b) More detailed classification is available when recording assets on the central fixed asset register.
3. Purchase of Assets
Land and Buildings
(a) The capital works budget covers land purchases, new buildings (including associated equipment & furniture requirements), building improvements & upkeep and other key University projects (eg: new student management system).
(b) The Capital Development Committee is responsible for prioritising the Capital Works budget allocation. Further information can be obtained from the Director of Property Services, or your division's financial analyst.
Other Fixed Assets
(c) Fixed assets other than land & buildings may be purchased in accordance with the delegations policy. Where a budget has been approved assets can be purchased up to that budget.
(d) Budget allocations can be transferred from operating expenditure to capital expenditure, but not vice versa, with the authority of the appropriate Divisional Head, subject to the limits in the Schedule of Financial Delegations.
(e) Fixed asset purchases may also be funded from Special Departmental Funds, External Research Grants, Otago Research Committee Grants, Trust Funds and carry forward credit balances. There is likely to be some conditions attached to the use of these sources of funding and further clarification should be sought from Financial Services Division.
(f) Note that the purchase of minor equipment (items costing less than $2,000) should be from the annual operating budget allocation.
(g) For items that can’t be funded for the above sources, projects requiring funding over & above approved delegations, or significant purchases, departments will need to access other sources of funding eg: equipment committee, capital works budget etc. For further information contact your divisional office or your division's financial analyst.
(h) The acquisitions section of the library is responsible for University purchase of library books & periodicals.
(i) A network of liaison staff throughout academic departments exists for the collection of requests for these purchases.
(j) Further information can be obtained from the Acquisitions Librarian.
4. Asset Recording and Documentation
(a) Physical assets are recorded on a Fixed Asset Register maintained by Financial Services Division. This register provides physical description, location, age, depreciation rate, cost and current book value detail for each asset costing over $2,000. Access to the asset register is via the Finance One Asset Officer Role.
(b) Approved purchases of fixed assets must be accompanied by an electronic asset addition form prepared within Finance One.
(c) This form contains details of the asset, including the physical description, division, cost centre, purchase account, depreciation account, value (excluding GST), useful life, location code and asset classification. Data fields are also available for other useful information including manufacturer, model, serial number etc.
(d) Items purchased by the Equipment Committee will be coded against the centrally held Equipment Committee budget. However the asset is attributed to the department for which the asset was purchased and any depreciation on the asset will be charged to that department.
(e) Each asset is attributed to a cost centre in the University. The staff member responsible for the cost centre is also responsible for the physical safeguarding and control of the asset. Any depreciation on the asset is charged to the responsible department.
(f) All purchases of an asset nature under the value of $2,000 should be charged to a Minor Equipment Account (dissection 3321 for minor computer equipment and 3216 for other minor equipment) in the relevant activity. Some of these purchases may be classed as an attractive item.
(g) Attractive items are those which are portable and readily resaleable. As part of the responsibility for safeguarding departmental assets departments are advised to maintain a record of attractive items.
(h) When purchasing motor vehicles please refer to the University Health and Safety Safe Driving Policy.
(a) All assets except Land and Special & Rare Library Collections have a limited useful life. We capitalise the asset by including it in the University Balance Sheet and then we reduce the value of the asset by charging depreciation to the Income & Expenditure Statement.
(b) The asset is depreciated to its estimated residual value. University assets are depreciated down to residual values as follows:
|Asset Type||Depreciation Rate||Notes|
|Buildings 10 - 100 years||1% -10% pa|
|Motor Vehicles 3 - 10 years||10% - 33.3 % pa||see note 1 below|
|Furniture & Fittings 5 - 10 years||10% - 20% pa|
|Plant & Equipment 10 years||10% pa||see note 2 below|
(all 4 years)
|Computers 5 years||20% pa|
|IPads, and other similar tablet devices 3 years||33.3% pa|
|Library Collections 5 - 10 years||10% - 20% pa|
(c) Depreciation is calculated monthly and charged to each cost centre in dissections 5111-5191.
(d) The breakdown of this monthly charge is available in Finance One.
Note 1: All Motor Vehicles will have a 'Salvage Value' entered on the asset register as the time of purchase. The Salvage Value will be set at 30% of the purchase price. The vehicle will then be depreciated to this Salvage Value over a 4 year period. In the last year of depreciation the Assets Officer will approach the departmental owner of the vehicle to review the current Salvage Value and the estimated period the department will retain the vehicle - after this review the Salvage Value and the Remaining Life of the vehicle will be adjusted accordingly and the vehicle depreciated to the new Salvage Value over the new estimated useful life.
Note 2: The default maximum depreciation period for Plant and Equipment is 10 years - this will be used unless the asset addition form is annotated with a shorter period.
6. Asset Disposal
(a) Disposal includes any sale, trade-in, loss, destruction, theft or write-off. The sale or gifting of an asset to another University of Otago department is NOT a Disposal - see Asset Transfer procedures below.
(b) The Head of Department is responsible for the custody and maintenance of their Department assets. All disposals must be made with the Head of Department's full authority in accordance with the delegations policy and must be properly recorded.
(c) An Asset Disposal Form must be completed and forwarded to the Assets Officer.
(d) The actual procedure for the sale of University assets must ensure that the University gains the maximum value for such disposals and that disposal procedures are fair. GST must be accounted for in asset sales as the University is GST registered.
(e) Disposal options include trade-in, sale to another University department, sale by auction, dismantling and public tender. For further advice on the best options for a particular disposal contact the Procurement Manager - Financial Services Division.
7. Asset Disposals — ITS E-Waste and E-Cycle Centre
(a) Electronic equipment and components should be recycled, ref to ITS E-Waste and E-Cycle Centre
8. Asset Disposals — Sale of surplus assets to staff
(a) Assets that are replaced by the University remain the property of the University until such time as they are sold, or disposed of if they have no realisable value.
(b) The sale of assets will be on the open market wherever possible. The University will not sell assets to staff or others at a value that is less than can be realised by sale on the open market. If the market value of an asset is not able to be easily assessed, the Chief Financial Officer must be consulted for a value to be agreed. Written advice from the Chief Financial Officer will be provided to Financial Services attached to the asset disposal form.
(c) Assets with no realisable value should be disposed of in the most appropriate manner, which may include gifting to staff, but only where an independent person provides written advice to the University that the asset being disposed of has no realisable value. The staff member disposing of the asset is responsible for obtaining the written advice and providing a copy to Financial Services attached to the asset disposal form.
(d) All disposal of assets to staff, whether through sales or gifting, requires the approval of the Chief Financial Officer. Written approval from the Chief Financial Officer must be attached to the asset disposal form provided to Financial Services.
9. Asset Disposals — Motor Vehicles
(a) Special conditions apply to the disposal of motor vehicles. All motor vehicles should be disposed of via auction at Turners. The Assets and Insurance officer should be notified of all intended Motor Vehicle disposals prior to their disposal. Vehicles will not be sold directly to staff, if any staff wish to purchase University vehicles they can only do so through Turners’ auction process.
10. Asset Disposals — Statutory Provisions
Education Amendment Act 1990
(a) Section 192(4)a of the Education Act states that the power to sell or otherwise dispose of assets or interests in assets shall not be exercised without the written consent of the Secretary of Education. Subsection 5 of Section 193 modifies this by allowing an institution to:
'Sell or otherwise dispose of, or mortgage or otherwise charge, an asset or interest in an asset, where the value of the asset or interest does not exceed an amount determined by the Minister or an amount ascertained in accordance with a formula determined by the Minister'.
(b) The following assets cannot be disposed of without first obtaining government approval. In all cases you should contact Financial Services Division on how to proceed:
- Any disposal of land and/or buildings (including removal and/or demolition).
- Any other asset disposal where the book value of the asset or group of assets being disposed exceeds $200,000.
Consumer Guarantees Act 1993
(c) The Act requires goods to be of an acceptable quality and reasonably fit for any particular purpose. The University may be in breach if any defects are not specifically drawn to the consumer's attention prior to sale.
Fair Trading Act 1986
(d) Prohibits any person from engaging in "conduct that is misleading or deceptive or is likely to mislead or deceive".
11. Asset Disposals — Sales Receipts
(a) Proceeds from the disposal of a fixed asset must be lodged with the Cashier and a Fixed Asset Disposal Form immediately forwarded to the Assets Officer after the disposal. If there are no proceeds from the disposal a Fixed Asset Disposal Form must still be completed and forwarded immediately to the Assets Officer.
(b) If a Fixed Asset is traded in, the supplier's invoice must show separately the total cost of the new item and the allowance for the item traded in. A Fixed Asset Disposal form and a Fixed Asset Addition form must accompany the supplier invoice before it will be passed for payment.
12. Asset Disposals — Accounting Treatment
(a) All proceeds from the disposal of a Fixed Asset should be credited to the Department's Proceeds from Sale of Asset account (dissection 5211).
(b) This 5211 account is included in the calculation of the department carry forward. Any remaining asset book value on the disposal will be credited (debited) to the Departments Book Value of Assets Sold (dissection 5215). This 5215 account does not impact on the department carry forward. The net effect of these 2 entries is the gain (loss) on sale of the assets for financial reporting purposes.
(c) The gain or loss on sale will be calculated by the Assets Officer once the Asset Disposal Form has been completed and forwarded to the Financial Services Division.
13. Sales of Assets between Departments and/or Divisions
(a) If a division or department wishes to sell a Fixed Asset to another University division or department a Fixed Asset Transfer Form is to be used. When this form has been completed it is to be forwarded to the Asset Officer.
(b) The Asset Officer will prepare the necessary entries to transfer the asset between the departments concerned. Any deemed selling price for the asset should be processed via journal entry by the purchasing department as an internal grant.
(c) No other action is required of the selling or purchasing department.
14. Control of Assets
(a) An important University internal control objective is the safeguarding of assets. University assets are widely distributed and the responsibility for their safeguarding rests with the Head of Department.
(b) All assets should be security marked (available from the Proctor's Office) and secure where ever possible. Assets should only be removed from the premises with the permission of the Head of Department and a system for recording the location of such assets should be in place.
15. Asset Audits
(a) The asset register is one of the key tools in ensuring assets can be accounted for. An audit of the main asset register will be carried out on a regular basis to ensure that the accuracy and completeness of the register is maintained.
(b) The audit will take the form of a cyclical check to ensure that all assets per the register are still in the department, that all new assets have been correctly added to the register, and that other information included in the register is accurate.
(c) In order to achieve these checks a Financial Services Division representative will assist the department administration staff conduct the checking on a test basis.
(d) The University has an extensive insurance programme aimed at minimising the risk of significant loss to the University. The policies have high levels of excess which reduces the premium costs but means that departments incur the first $500,000 of every claim (except for motor vehicle claims). Hence insurance does not remove the obligation to manage risk within the departments.
(e) The policy covers goods in transit within NZ and Australia only. Staff taking assets to other countries, which exceed the covers available on the University Travel Insurance, must arrange additional insurance cover.
Related Policies, Procedures and Forms
Contact for Further Information
For further information, contact the Financial Controller, extn 9247 or email firstname.lastname@example.org