Asset Management Operational - Acquisition and Disposal

Approved by

Dr. Megan Gibbons

Chief Executive

Date: 3 May 2022

Policy Version: V2: Previously Coded: MP0362

Effective asset management and capital expenditure are essential for the continuity, development, and growth of Otago Polytechnic Limited.

The purpose of this policy is to ensure that capital expenditure by Otago Polytechnic Limited is planned, evaluated, authorised, implemented, monitored, and reported in a systematic manner, for best practice, and that the disposal of assets is a transparent process that achieves best value for Otago Polytechnic Limited. A flowchart of the process is attached to the Standard Operating Procedure (SOP) (refer to Appendix 2ii).

Education and Training Act 2020 and

 Education and Training Amendment Act 2021

Public Finance Act 1989, and all subsequent amendments

Public Records Act 2005, and all subsequent amendments

Te Pūkenga Operational and Financial Parameters (OFP)

Definitions

Assets can be defined by their nature and include:

• Fixed assets (capitalised assets including electronic resources).
• Work in

Other assets not covered in this policy being:

• Intangible
• Current

Intangible assets i.e., non-physical assets such as goodwill, course development, patents, and other intellectual property.

Current assets i.e., assets that have an initial economic life of less than one (1) year or are able to be realised within one (1) year.

A capitalised asset:

• Is an item that has an estimated useful life in excess of one (1)
• Has a cost that satisfies the capitalisation
• Has not been acquired or constructed with the intention of resale; and
• May include such expenditure incurred on an existing asset to improve its functionality and/or extend its useful life but not merely reinstate the future economic benefit of an asset (i.e., repairs and maintenance).

The fixed asset register is the schedule of fixed assets maintained by the Financial Services and is used for financial reporting purposes.

The SPM asset management system (SPM) provides condition assessment data, used for strategic decision-making in regard to acquisition, repair, and disposal of assets. The SPM system is maintained by the delegated SPM administrator.

The capitalisation threshold for the fixed asset register is $2000 excluding GST and applies to:

• Individual
• A collection of related items or components that cannot operate in isolation, whose combined original cost exceeds the
• An accessory which is acquired for permanent attachment to an existing capitalised asset. The cost of the accessory is to be added to the existing asset if it meets any of the capitalisation thresholds.
• Pooled assets of a similar type, whose combined cost exceeds the threshold.

The capitalisation threshold for the SPM asset management system is $2000 excluding GST.

Disposal of assets - the sale or partial sale, scrapping, write-off, barter, trading, or any other means of ceasing beneficial ownership or custody of assets.

Purchase of Assets (refer to Appendix 2i and 2iii.).

         1.1 All purchases of assets should be included in the current capital expenditure budget or reforecast approved by Te Pūkenga Council. The  Delegations from the Board to the Chief Executive and Authorities and Sub-delegations from the Chief Executive policy sets out the circumstances and procedures whereby unbudgeted assets can be purchased (only allowed if approved by the Deputy Chief Executive, Corporate Services prior to the purchase being made).

        1.2. Purchases must be made in accordance with the Procurement and Purchasing Policy Te Pūkenga Aligned.

        1.3 All approved fixed asset (capital) purchases must have a five-digit Capital Approval Number (CAN), assigned by either the Financial Services, Information Systems and Support (ISS) or Campus Environment (CEnvt).

1.3.1 The CAN number is used for the analysis code part of the account number, on the items purchase  order. Once the purchase order is approved and physically received the order must be receipted in Finance One. After the purchase is receipted, an Asset Additions Form must be completed (refer to Appendix 2iii)) and sent to Financial Services.

          1.4. Finance will:

1.4.1 Load the asset into the Fixed Asset Register.

1.4.2 Assess if the asset needs to be loaded into the SPM Capital Asset Management System (land and buildings, and teaching assets greater than $2000).

1.4.3 Contact the College/Service Area to obtain the additional information required for the SPM system.

1.4.4 Forward the details to the SPM administrator for them to be entered.

          1.5 All assets must have a barcode number allocated (generally by Financial Services) and forwarded to the College/Service Area for attachment to the asset. The exception is assets purchased by ISS and CEnvt who allocate their own barcode number and advise Financial Services. The barcode number becomes the unique identifier for the life of the asset.

          1.6 If the asset purchased replaces an existing asset, the existing asset must be disposed of in line with the following disposal of assets procedures. Refer to Appendices 2ii and 2iv).

2 Disposal of Assets (refer to Appendix 1ii and Appendices 2ii and 2iv).

          2.1 Assets may be disposed of for these reasons:

Surplus to current or immediately foreseeable requirements.

• Part of an asset replacement programme.
• Unserviceable or beyond economical repair.
• Technologically obsolete and operationally inefficient.
• A replacement asset has been purchased.

          2.2 All monies received from the disposal of assets must be banked into Otago Polytechnic Limited bank account as soon as is practicable (Education and Training Act 2020 and the  Education and Training Amendment Act 2021).

          2.3 Otago Polytechnic Limited has delegated authority to dispose of assets up to a certain financial limit (currently $50,000). Assets with values above this limit require written consent from the Secretary of Education to:

• Sell or dispose of assets or interests in assets.
• Mortgage or change assets or interests in assets.
• Grant leases of land or buildings.

         2.4 Disposal of assets will be carefully managed to ensure the best net value for the asset is realised and completed in an efficient, effective, and transparent manner. All disposals will be appropriately authorised and adequately documented.

        2.5 Employees, contractors, or Board members may purchase an asset in an open tender or auction process providing they have no decision-making involvement in the disposal process.

        2.6. Employees, Contractors, or Board members may purchase assets without an open tender or auction process provided that:

• The market value has been established by reference to independent comparisons for the like product (e.g., using Trade Me) and is less than $1000; and
• The Director: Financial Services, the Chief Information Officer (CIO), or the Deputy Chief Executive: Corporate Services approved the

The sale price can be either book value or market value as approved by the Director: Financial Service, the CIO, or the Deputy Chief Executive: Corporate Services.

3. Recording of Assets

       3.1 All assets that exceed the capitalisation threshold (refer to Definitions above) must be recorded on the fixed asset register by the Financial Services and in the SPM system by the delegated SPM administrator in accordance with the SOP, flowcharts, and forms (refer to Appendices 1 and 2).

       3.2 Assets are recorded in the fixed asset register for finance purposes and in the SPM asset management system for strategic asset management purposes.

       3.3 In the fixed asset register, purchased assets are initially recorded at cost price with the exception of donated items which are recorded at their fair market value.

       3.4 After the initial purchase, assets are recorded at cost price less depreciation or at revaluation dependant on the asset class.

4. Asset Stocktake

Physical verification of assets is to be completed in line with the following procedures:

       4.1 Colleges and Service Areas are primarily responsible for undertaking verification (stocktake) of their assets and specified items (except for land and buildings). This verification process is to be completed annually.

       4.2 Financial Services is responsible for undertaking verification of specified items (except for land and buildings). This verification process is to cover:

• Annual physical verification of assets with a net book value over $50,000.00.
• Bi-annual physical verification of assets with net book value between $20,000 and $49,999.99.
• Tri-annual verification of assets with net book value between $2,000 and $19,000.00.
• Assets with a net book value below $2,000 will not be subject to asset verification.

      4.3 The objective of physical verification is to maintain the integrity of the Otago Polytechnic Limited’s Asset Register by:

• Ensuring that all assets held with a net book value over $2,000 are recorded in the
• Verifying that all assets in the register with a net book value over $2,000 have been physically located and are still functional and in use; and
• Updating the register for unrecorded changes in asset ownership, responsibility, or location.

Policies

Delegations from the Board to the Chief Executive and Authorities and Sub-delegations from the Chief Executive Policy.

Procurement and Purchasing Policy Te Pūkenga Aligned

Strategic Asset Management Policy and Guidelines

Reference Documents - attached below: 

Appendix 1.  Standard Operating Procedure

Appendix 2.i Asset Addition Flowchart

Appendix 2.ii Asset Disposal Flowchart

Appendix 2.iii Asset Additions Form

Appendix 2.iv Disposal of Assets Form

Appendix 2.v. Otago Polytechnic Limited Fixed Assets Lifecycle Flowchart – Capital Assets Addition Process.

APPROVED:

Dr. Megan Gibbons

Chief Executive

Date: 4/4/2022

POLICY VERSION V5: Previously Coded: MP0438

In relation to policy Asset Management Operational - Acquisition and Disposal Policy the following procedures should be followed, for disposal of assets.

ISS Assets:

1. The asset user must email ISS to organise the appropriate disposal or relocation of the asset. ISS must follow the standard asset disposal procedures.

 Non-ISS Assets:

2. If the asset is still in good working order the College/Service Area should contact the CEnvt who will assess whether it is appropriate to offer to other Otago Polytechnic Limited Colleges/Service Areas for use.

 All Disposals:

3. The following process is followed:
   1. Colleges/Service Area should ensure that all assets being disposed of do not contain any software, Otago Polytechnic Limited information, or logos.
   2. A request for disposal is made by the completion of the Disposal of Assets Form (Appendix 2iv) by the Head of College/Director: ISS or CEnvt (excluding the actual sale price and the purchaser sections).
   3. The partially completed form should be forwarded to Financial Services for appropriate sign-off. Completion and signing of the Disposal of Assets Form by all parties will satisfy the appropriate delegated authority requirements.
   4. Financial Services will return the signed form to the Head of College/Director: ISS or CEnvt.
   5. If the asset has a market value or a book value greater than $20,000 Financial Services must forward the form to the DCE: Corporate Services to approve the sale and to agree the method of sale.
   6. Once the form is signed the listed asset is able to be disposed of for no less than the approved sale price.
   7. Once the assets have been sold the Head of College/Director: ISS or CEnvt must complete the section of the form advising the sale proceeds and the purchaser for each item number listed.
   8. The barcode must be removed and returned to Financial Services with the fully completed disposal of assets form.

 Method of Sale (Estimated Market Value) Guidelines

4. The Asset Owner must establish the estimated market value based on previous sales, from advertisements or other sources such as newspapers and internet auctions. Where no market value is available the written down value from the fixed asset register should be used as a best estimate. It is essential that the process whereby the market value is estimated be properly documented, including keeping copies of relevant advertisements. This documentation should be attached to the Disposal of Assets Form. In many cases, a sale using Trade Me will be appropriate, with the reserve set at the approved sale The Otago Polytechnic Limited Trade Me account should be used (details can be obtained from Financial Services).
5. The Head of College/Director: ISS or CEnvt are responsible for ensuring an arm's length transaction between the seller and the buyer and approving the sale in writing.
6. Transportation costs are to be met by the buyer and the purchase is at the buyer’s risk.
7. Offers received must be documented and the Head of College/Director: ISS or CEnvt must approve the successful ofer.

 Sale of Land and Buildings:

8. Any sale of land or buildings regardless of ownership or value must be approved by the Secretary of Education via the Otago Polytechnic Limited Board. The DCE: Corporate Services will ensure that internal and external delegations and approval processes are followed.

 Trade-in of Assets:

9. Where the trade-in of an existing asset is included in the acquisition of a new asset, the external requisition and purchase order must identify:
   1. The asset being acquired, including full cost.
   2. The asset being traded in with full details of the trade-in value.
   3. The net amount payable.

Donations to Schools, Charities, or Non-profit Organisations.

10. Surplus assets may be donated to charities, schools or colleges, or community/non-profit organisations.
11. The reasons for a donation rather than a sale must be included on the Assets Disposal Form. In most cases, it is expected that the asset will have been previously offered for sale however no acceptable offers were received.
12. CEnvt can assist with transporting the item to the organisation with any costs being met by the College Service Area.
13. Items cannot be given/donated to staff or learners unless approved by the Chief Executive or DCE: Corporate Services.

Obsolete Unserviceable or Beyond Economical Repair Assets that cannot be sold.

14. Assets or groups of assets that are obsolete, unserviceable, or beyond economical repair and cannot be sold or donated to a community organisation must be written off.
15. CEnvt must be contacted for assistance with regard to items with environmental obligations.

Asset Additions Form editable

Disposal of Assets Form editable