session 10 asset segment presented by: national treasury

SESSION 10ASSET SEGMENT

PRESENTED BY: NATIONAL TREASURY

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ASSET SEGMENT

• New segment on BAS

• Distinguish Assets and Non Assets

• Purpose:• Improved management of assets• Proper recording of expenditure

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BENEFITS: ASSET SEGMENT

• One central list of all capital assets

• Economic classification - Project segment

• Asset segment provides for• Tangible: Physical, Movable/Immovable• Intangible• Non-assets• Assets less than R 5 000• Classes and sub-classes of assets

• Asset items “Breakdown” allowed

• Aligned to categories in AFS/Asset registers

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AUDIENCE QUESTION

• Why should the breakdown facility on the asset segment be utilised if it can be done in the project segment?

• A project consists of different assets with no departmental specific detail and direct link between them. The asset segment breakdown can provide the detail.

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METHODS OF ACQUISITION

• Asset purchasing (buy)

• Asset construction (build)

• Hiring of assets

• Asset transfers

• Asset exchanges

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AUDIENCE QUESTION

• Is the item segment not describing the type of asset?

• No. It only indicates the method of acquisition.

• Where asset is purchased:• Item: Elevator/Escalating systems• Asset: Tangible capital asset: Buildings and

Other fixed structures: Non-residential buildings: Office building

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AUDIENCE QUESTION (CONTINUED)

• Is the item segment not describing the type of asset?

• Where asset is leased:• Item: Lease payments• Asset: Tangible capital asset: Buildings and

Other fixed structures: Non-residential buildings: Office building

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GRAP APPLICABLE TO ASSETS

• GRAP 11 - Construction Contracts

• GRAP 12 – Inventories

• GRAP 13 – Leases

• GRAP 16 – Investment Property

• GRAP 17 – Property, Plant and Equipment

• GRAP 100 – Non-Current assets for sale

• GRAP 101 – Agriculture

• GRAP 102 – Intangible Assets

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ASSET SEGMENT: ANALYSIS

TWO QUESTIONS

• What is the distinction between an asset (capital) and non-asset (current) expenditure?

AND

• Does the transaction relate to an asset, and if so, which category of asset?

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Capital Assets

Inventory/Stock items(Current Assets)

Asset Register items(Non-current Assets)

Current Expenditure(Goods & Services)

Tangible Assets Intangible Assets

Minor Assets(< R5000)

Major Assets(> R5000)

Minor Assets(< R5000)

Major Assets(> R5000)

Current Expenditure(Goods & Services)

Capital Expenditure

Current Expenditure(Goods & Services)

Capital Expenditure

Statement of Financial

Performance(G&S Note)

Statement of Financial

Performance(G&S Note)

Statement of Financial Performance(G&S Note)

Statement of Financial

Performance(Note)

Statement of Financial

Performance(Note)

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SEGMENT CATEGORIES

• Major Asset segment classes• Buildings and other fixed structures • Machinery and equipment• Heritage assets• Biological/Cultivated assets• Specialised Military assets• Software and other intangible assets• Land and subsoil assets

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ASSETS DEFINED

• Asset – Components of definition • Resource• Control• Future economic benefits/service potential• More than one reporting period

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ASSETS DEFINED

• Buildings and other fixed structures

• Buildings• Fixed structures inhabitable by people, animals,

plants or utilised as storage areas

• Other fixed structures• Structures other than buildings i.e. roads, dams,

bridges

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ASSETS DEFINED

• Biological/Cultivated assets• Biological assets are living animals or plants

which are actively managed to effect biological transformation

• Machinery and equipment• Mechanical or electrical appliances, including

furniture, utilised in execution of tasks

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ASSETS DEFINED

• Land and subsoil assets

• Land excludes

• Improvements or

• Cost of transfer of ownership

• Subsoil assets proven reserves of oil, mineral and ore

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ASSETS DEFINED

• Intangible assets

• Identifiable

• Non-monetary asset • Without physical substance

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INTANGIBLE ASSETS DEFINED

• Identifiably criteria: • Capable of being separated and dealt with

individually• Arises from contractual rights, excluding rights

granted by statute

• Distinguish goodwill and intangible• Goodwill – payment in anticipation of future

economic benefits from assets that cannot be individually identified

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INTANGIBLE ASSETS DEFINED

• Assets incorporating tangible and non-tangible features: Exercise judgement to assess which element is more significant

• Knowledge may result in physical asset. Physical substance secondary to knowledge embodied in asset

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AUDIENCE QUESTION

• The department has developed software utilised by Land and Quantity surveyors, how is this classified in the asset segment?

• Allocated to following asset class– Item: Inventory/Compensation of Employees– Asset: Intangible asset

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ASSETS DEFINED

• Heritage assets• Assets that have unique cultural, environmental,

historical, natural, scientific, technological, or artistic significance for the benefit of future generations

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AUDIENCE QUESTION

• Are maintenance, repair and running costs allocated to assets in the asset segment and if so why?

• Yes, in order to identify the asset and track accumulated expenditure on that asset/group

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EXAMPLE ALLOCATIONS

• Repairing a standalone air-conditioner

• Allocation• Item: Contractors: Maintenance of Equipment• Asset: Tangible capital asset: Machinery and

Equipment: Other machinery and equipment: Building Air-conditioning system

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EXAMPLE ALLOCATIONS

• Buy a truck to be used in construction of a community centre

• Allocation• Item: Purchase/Construction Capital assets:

Machinery and equipment: Transport equipment: Trucks

• Asset: Tangible capital asset: Machinery and Equipment: Transport equipment: Trucks

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EXAMPLE ALLOCATIONS

• Permit issued for a hiking trail in a Provincial Park

• Allocation• Item: Sales: Goods and Services: Administrative

Fees: Hiking Trails• Asset: Non-assets related

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EXAMPLE ALLOCATIONS

• The department is constructing a dam utilising consultants

• Allocation• Item: Consultants and Professional Service:

Engineering Civil• Asset: Tangible capital asset: Other Fixed

Structures: Water Dams

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EXAMPLE ALLOCATIONS

• The department is constructing a car park from own account?

• Allocation• Item: Inventory/Compensation of employees• Asset: Tangible asset: Other fixed structures:

Car Park

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EXAMPLE ALLOCATIONS

• The department transfers funds for asset construction to a municipality

• Allocation

• Item: Transfers and Subsidies

• Asset: Non-asset

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AUDIENCE QUESTION

• What asset allocation should be used for a payment of a Travel & Subsistence advance?

• Non-asset – No resource controlled, no future economic benefits/service potential

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ASSET SEGMENT SUMMARY

• Provides for details of asset classes

• Eliminates duplication in Item Segment

• Allows for capturing of own account transactions

• Alignment with the Asset Management Guide

• Not Asset Register

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For any additional questions or issues for clarification, please contact the National Treasury SCOA Technical Committee at:

• Call centre: (012) 315 5311

• E-mail: scoa@treasury.gov.za

• Website: http://scoa.treasury.gov.za