Transcription
ASSET MANAGEMENTPROCEDURETHE MICO UNIVERSITY COLLEGE1A Marescaux Road, Kingston 5Office of Accountability:Office of Administrative Responsibility:Date Procedure Created:Date Procedure Approved by the Board:Date of any Procedure Revision:The Mico: Asset Management ProceduresOffice of the VP Administration Accounts Department Each and Every DepartmentNovember, 2011Page 1
Table of ContentsA.B.Introduction . 31.Purpose . 32.Organisational Scope . 33.Definitions . 34.Procedure Content. 54.1Budgeting for Capital Expenditure . 54.2Recognition . 54.3Measurement after recognition . 64.4Depreciation. 84.5Impairment of Assets . 94.6Physical Verification of Assets. 94.7Disposal of Assets. 105.Legislative Compliance. 116.References . 11Appendices . 12Appendix I – Asset Register Form . 13Appendix II – Asset Disposal Form . 14The Mico: Asset Management ProceduresPage 2
A. IntroductionAssets Management is a system of maintaining, upgrading and operating physical assets. It is alsopart of Generally Accepted Accounting Principles. The University College therefore shall implementprocedures to ensure that it has a fair knowledge of its property and property locations and employaccepted accounting principles to capitalize and depreciate its investment as necessary especially fortax and insurance purposes.1. PurposeThe purpose of this procedure is to ensure that the University College monitors, manages andmaintains its assets to provide the best possible service to its users.2. Organisational ScopeThese procedures are relevant to all of the University College’s property or assets and are applicableto all staff members.3. DefinitionsFor purposes of this procedure, unless otherwise stated, the following definitions shall apply:Book Value:Is the cost of a plant asset minus the accumulated depreciation since the asset wasacquired. This net amount is not an indication of the asset's fair market value.Capitalization Threshold: The value set for capital items that are to be depreciated.Cost Model:Initial cost less accumulated depreciation and any accumulated impairment losses.Computing Equipment: Include servers, printers, scanners, and plotters. (Note purchasing of smallnon-networked printers for individual machines is discouraged. Where suchprinters are required, the IT Department will assess the need in the area, andattempt to install a networked printer which will service the area and whichIT Department can support centrally).Desktop Equipment:Includes all components of a personal computer unit and laptops i.e. themonitor, base unit, mouse, mouse pad, keyboard, speakers, and thestandard application/operating software, cables and freight.Specified Item:Is an asset that doesn’t meet the capitalisation criteria but is recorded as afixed asset through the asset register because it is prone to accidental ordeliberate loss due to its portability and attractiveness e.g. palm pilots,videos, cameras, televisions and audio equipment.Depreciation:Is a charge on a fixed asset to allocate the cost of the asset over theestimated useful life of the asset. The depreciation charge for each period isrecognised as an operating expense and shall be charged to the budgetcentre that holds the asset.The Mico: Asset Management ProceduresPage 3
Fair Value:Is the amount for which an asset could be exchanged betweenknowledgeable, willing parties in an arm’s length transaction. Where thereis no market based evidence of fair value (because of the specialised natureof the asset) depreciated replacement cost may be used.Repairs andMaintenance:Include costs incurred in the day-to-day servicing of an asset, includinglabour, consumables, and the cost of small parts.Recoverable Amount: Is the higher of an asset’s fair value less costs to sell and its value in use.Value in use would usually be determined as the present value of future cashflow projections.Residual Value:(Salvage value)Is the remaining value of an asset after it has been fully depreciated (thevalue at the end of the useful life of an asset).Impairment ofan asset:When the book value of an asset falls below its recoverable amount, theasset is considered impaired.Initial Cost:Includes the asset’s purchase price plus any costs directly attributable tobrining the asset to the location and condition necessary for it to be capableof operating in the manner intended.Useful Life:Is defined as the period over which an asset is expected to be available foruse by the University College. It is determined in relation to an entire assetcategory, as opposed to an individual asset and after considering thefollowing factors; expected usage, physical wear and tear, technical orcommercial obsolescence, legal or other limits.Disposal of Asset:Is the removal of an asset no longer needed by means of sale, write-off,trade-in, transfer or donation.The Mico: Asset Management ProceduresPage 4
4. Procedure Content4.1Budgeting for Capital Expenditurea) All capital expenditure purchases must have an approved budget allocation before purchase cantake place (except for emergency purchases and externally funded assets).b) The procurement guidelines as outlined in the GoJ’s Handbook Public sector ProcurementProcedures and The Mico University College Procurement Procedures shall be followed.c) For Emergency procurement of Urgent Non-budgeted purchases:Approval shall be sought from the President or VP Administration or their NomineeProcedures as outlined in the GoJ’s Handbook Public Sector Procurement Procedures shallbe followed.4.2Recognition4.2.1Capitalisation CriteriaAction4.3.1.1.Classify all assets.Any asset classed as a fixed asset and shall be recordedon the University College’s Fixed Asset Register when itmeets all of the following criteria (CapitalizationThreshold):The item i)Has an initial cost price greater than J 10,000.00ii)Is Computing equipmentiii)Is Desktop equipmentiv)Is an Individual work of artv)Is a piece of furniture and in particular antiquefurniturevi)Is equipment e.g. Air conditionersvii) Is a “specified” itemsviii) Has an estimated useful life greater than 1 yearix)Has not been purchased with the intention ofresale.Responsible OfficerVP Administration /Bursar4.3.1.2.For existing assetExpenditure shall be capitalised if the expenditure wasincurred to improve the asset’s functionality e.g. repairs andmaintenance.Bursar4.3.1.3.Spare parts may be capitalised where they meet thecapitalisation threshold and they are expected to beused over more than one year.BursarNote: Expenditure splitting in order to get below the capitalisation threshold (J 10,000) is notpermitted.The Mico: Asset Management ProceduresPage 5
4.3Measurement after recognition4.3.1Details for the Asset RegisterEach item on the Asset Register shall be assigned a Number, which shall be alpha-numeric, toincorporate the location of the asset, the type of asset and an assigned numeral.ActionResponsible Officer4.3.1.1.Establish an Asset Register :i) Record al assets (once it has been established that theasset meets the criteria for recognition) on theUniversity’s Fixed Asset Register, using the form atAppendix Iii) Provide the Accounts Department with the list of itemsidentified on the Register, their description, Serial No.Manufacturer, Location, Custodian and Asset RegisterNo.iii) Identify whether or not the item is moveable e.g.classroom chairs.iv) Keep the Asset Register current, by periodic reviews.v) Account for disposal of an asset as is necessary.VP Administration4.3.1.2.Complete the Asset Register by providing information onpurchase of the asset, the value, and depreciation.Bursar4.3.1.3.Assign an Asset Register Custodian at each location that shallhave the responsibility ofi) Assisting with the formulation of the Asset Register forthat locationii) Ensuring the maintenance of the Asset Register at thatlocationHead of Faculty /Department / orAppointee4.3.1.4.Post at each location the Assets Register for that location.VP Administration4.3.1.5.Ensure that the Assets Register has the requisite details ofeach item which shall include but not limited toi) Location details and identification numberii) Asset description with serial number, supplier andmanufacturer and asset identification numberiii) Purchasing details or details of valueiv) Cost of assetv) Disposal information where necessaryVP Administration /Asset Custodian forLocation /Bursar4.3.1.6.For Accounting PurposesVP Administration /Asset Custodian forLocation /BursarMeasure items as:i)ii)Individual assets; orA collection of related items or components thatcannot operate in isolation, whose combinedoriginal cost exceeds the threshold (refercapitalisation threshold defined in section 4.2.1; orThe Mico: Asset Management ProceduresPage 6
iii) An accessory which is required for permanentattachment to an existing capitalised asset. The costof the accessory is to be added to the existing assetif it meets any of the capitalisation threshold; oriv) Pooled assets of a similar type, whose combinedcost exceeds the capitalisation threshold. Itemswhose individual value exceeds the threshold mustbe separately detailed in the Fixed Asset Registerand cannot form part of a pool of assets.4.3.2Method of measurementActionResponsible Officer4.5.1After initial recognition the University College shall:Choose the cost model of measurement or revaluation.(The model shall be applied across the entire class ofasset and shall not differ among individual assets in aclass).Bursar4.5.2Conduct revaluation of classes of assets frequently todetermine if at balance date, the fair value of the assetdiffers materially from the carrying amount.The approved methods of measurement by class of assetare:Bursar4.5.3Asset ClassInfrastructure AssetsModel ofMeasurementCycleRevaluationEvery 4 yearsRevaluationEvery 10 yearsComputing EquipmentIT Software CostFurniture & EquipmentLibrary CollectionsMusical equipmentVehicles CostWorks of art, classical antiquities,heritage collection, museum artefactsThe Mico: Asset Management ProceduresPage 7
4.4DepreciationActionResponsible Officer4.4.1Charge depreciation on an item in each period to the budgetcentre that holds the asset. (The depreciation amount of anasset is the initial cost or revalued cost less the residualvalue).Bursar4.4.2Review this estimate at the end of each financial year andnote change in the accountsBursar4.4.3Review the depreciation method and rates annually toensure they remain appropriate.(The depreciation method used reflects the pattern inBursarwhich the assets future economic benefits are expectedto be consumed by the University College).4.4.4Depreciate assets purchased solely for specific projects overthe life of the project. Where the asset is not depreciated ofthe life of the project the budget centre owning the projectshall bear the residual depreciation).Bursar4.4.5Leasehold improvements are depreciated over theshorter of the unexpired period of the lease and theestimated useful life of the assets.Bursar4.4.6Depreciation methods and rates used by the UniversityCollege are:Asset ClassCycleInfrastructure Assets5 – 40 years (under advicefrom independent valuer)Computing Equipment3 – 5 yearsIT Software Cost3 – 5 yearsFurniture &Equipment Cost3 – 15 yearsLibrary Collections Costs3 – 10 yearsMusical equipment Cost5 - 13 yearsVehicles Cost5 yearsWorks of art, classical antiquities, heritagecollection, museum artefacts CostNot depreciated due to theheritage nature of the asset.The Mico: Asset Management ProceduresPage 8
4.5Impairment of AssetsAction4.6Responsible Officer4.6.1Non-revalued AssetsRecognise any impairment loss immediately in the FinancialStatement.Bursar4.6.2Revalued AssetsRecognise any impairment loss directly against anyrevaluation reserve to the extent that the impairment lossdoes not exceed the amount in the revaluation of that asset.Bursar4.6.3Review the book values of all property, plant and equipmenton an annual basis.Bursar.Physical Verification of AssetsThe objective of physical verification is to maintain the integrity of the University’s Asset Registerby:i)Ensuring that all the assets held are recorded in the register;ii)Verifying that all assets in the register have been physically located and are still functionaland in use; andiii)Updating the register for unrecorded changes in asset ownership, responsibility orlocation.ActionResponsible Officer4.7.1Ensure that all items, inclusive of assets and specified items,the property of the Mico University College and especiallythose itemized on the Asset List remain the property of theUniversity College in the location identified.All Staff4.7.2Undertake verification of all the assets and specified items,before the budget period, to include:VP Administration /Asset Custodian forLocation /Bursari)Annual physical verification of assets with net bookvalue/cost overJ 275,000.00;ii) Biannual physical verification of assets with netbook value/cost between J 50,000 andJ 274,999.99;iii) Tri-annual verification of assets with net bookvalue/cost between J 10,000 and J 49,999.99;iv) Immaterial asset below J 10,000 will not besubject to asset verification.The Mico: Asset Management ProceduresPage 9
4.7Disposal of AssetsThe University College shall be required to obtain the consent of the Ministry of Education to disposeof, or sell assets where the value of those assets exceeds an amount determined by the Ministry ofEducation.However, below this threshold items shall be disposed of in the following manner:Action4.7.1a)Determine the method of Disposal of the Asset i.e.i)Saleii) Trade-iniii) Write-offiv) Internal Transferv)Donationvi) Any other disposal methodResponsible OfficerAsset Custodian atLocationb) Make recommendation to the Dean of the Facultyor the Head of Department.4.7.2a)Determine the reason for the write-off, thereforewhether an asset is: :i)Stolen; orii) Lost; oriii) Obsolete; oriv) Converted to components; orv) Un-repairable; orvi) Uneconomical to repair; orvii) Any other reasonb)Make recommendation to the Dean of the Faculty orthe Head of DepartmentAsset Custodian atLocation4.7.3Seek approval from the VP Administration to dispose of anasset by completing the Asset Disposal Form supplying thenecessary support documents. Asset Disposal Form(Appendix II)Dean of Faculties / Headsof Department4.7.4i)ii)VP Administration4.7.5Ensure that the Office of the VP Administration received theasset to be disposed of.Dean of Faculties / Headsof Department4.7.6Undertake and make arrangements for the physical disposalof all assets except computing assets.VP AdministrationGrant approval as is necessaryAdvise the Bursar that the asset should be removedfrom the Fixed Asset Register, by submitted therequisite approval.Where the asset is specialised or unique in some way ensurethat specialist advisers determine the best method ofdisposal.The Mico: Asset Management ProceduresPage 10
4.7.7Dispose of all computing equipment that is to be disposedof. All software and data stored on computers and serversshall be fully deleted and cleaned before the asset isdisposed of.Head of the ITDepartment5. Legislative ComplianceThe University College shall comply with all the relevant laws, guidelines, rules, regulations andprocedures within a legislative framework, of the Laws of Jamaica.6. Referencesa) Financial Administration and Audit Actb) GoJ’s Handbook of Public Sector Procurement Proceduresc)The Mico’s Procurement Policyd) The Mico’s Procurement Procedurese) The Mico’s Investment PolicyThe Mico: Asset Management ProceduresPage 11
B. AppendicesAppendix I – Asset Register FormThe Mico: Asset Management ProceduresPage 12
Appendix II – Asset Disposal FormThe Mico University CollegeASSET DISPOSAL FORMPlease read instructions overleaf to complete formCONTACT DETAILSNAME CONTACT PERSONDEPARTMENTLOCATION IDTelephone No.DESCRIPTION OF ITEMEmail AddressDESCRIPTION and/orTYPE OF ITEMAsset Register No.Manufacturer:Serial No.Year of PurchaseDISPOSAL OF ITEMTYPE OF DISPOSAL:1. SaleOriginal Cost2.3. Trade-in Wright-off4. Donation5. Internal TransferDate of Disposal1.For Sale: Buyer’s Detail – Name:Buyer’s Detail - Address:Sale Value2.For Trade-in: Entity’s Detail – Name:Entity’s Detail - Address:Appraised ValueDetails of New Asset3.For Write-offs - Reasons Stolen Lost Obsolete4.For Donations:5.RationaleFor Internal Transfer: Details(Location etc.) Converted to components Un-salvageable Uneconomic to salvageName of EntityFor Assets Sold or Traded In – Details of Disposal Process (Advertising, Public auction, Tender etc.)For Assets Not Sold (Write-offs) – Details of Disposal Method (Destroyed etc.)Proposed ure:DateDean / HODAuthorised ByPresident / VP AdministrationAsset Register updatedin Accounts byBursarInsurance Register updatedin Accounts byBursarThe Mico: Asset Management ProceduresPage 13
NOTES ON COMPLETIONThe purpose of this Form is to provide as much information as possible regarding the asset to be disposed of, for updating theUniversity College’s Asset Register and Insurance Records.Please read the following in its entirety before completing this Form.1.APPROVALS-This Form must be signed by The President of the UniversityCollege or the VP Administration or their Nominee.2.YOUR DETAILS-All fields must be completed.3.DESCRIPTION OF ITEM-The Asset Register Number and full details of the item, as bestknown, must be given.4.DISPOSAL DETAILS-A description of the type of disposal proposed.If “written-off”, under what circumstancesIf sold or traded-in,- details of the entity- the value at which it was sold or traded-in- details of the new asset- details of the proceeds of sale and payment processingIf obsolete, manufacturers recommendation.If donated details of the entity to receive the asset and a rationale as towhy that entity was chosen for the donation.OTHER INFORMATIONTo comply with the requirement for proper disposal, please ensure that all relevant waste electrical and electronicequipment is separated from other wastes and is disposed of following all Health and Safety recommendations.The Mico: Asset Management ProceduresPage 14
The Mico: Asset Management Procedures Page 5 4. Procedure Content 4.1 Budgeting for Capital Expenditure a) All capital expenditure purchases must have an approved budget allocation before purchase can take place (except for emergency purchases and externally funded assets).
