Ensures all staff of RMIT University and controlled entities are consistent in the management of University assets.
|Policy category||Operational Effectiveness|
|Effective date||18 May 2020|
|Review date||28 November 2022|
|Owner||Chief Financial Officer|
|Author||Deputy CFO - Financial Control|
|Print version||Asset Management Procedure|
The purpose of this procedure is to ensure consistent management of University assets.
This procedure is related to all:
- property, plant and equipment (PPE) purchased, constructed or developed with RMIT resources, irrespective of source of funds that are owned and controlled by the respective entity
- PPE loaned or donated by/to RMIT
- intangible assets
- leased assets (where the lease term is longer than 12 months or the leased item’s purchase price exceeds $5,000).
This procedure applies to all staff of RMIT University and its controlled entities (known as the RMIT Group).
1.1. The initial purchase price of the PPE will include costs incurred in getting the asset to a position of use (e.g. import duties, delivery fees). When the full value of the PPE is established, an Asset Registration Form must be completed, and an asset master record created.
1.2. The capitalisation threshold for PPE to be recognised as an asset is $5,000. This applies to all asset classes except Library & Works of Art.
1.3. All PPE purchased, constructed or loaned will be recorded in the Fixed Assets Register maintained within the Financial Services Group.
a) All purchased PPE initiated within a budget centre with a unit price as per the threshold authorised by relevant governance body are to be included in the SAP Fixed Assets Register.
b) All constructed PPE initiated within a budget centre with a completed project cost/total price as per the threshold authorised by the relevant governance body are to be included in the SAP Fixed Assets Register. All capital is recognised as work in progress until the project is completed. All work in progress is recorded using the project module in SAP.
1.4. Cost of the employee benefits can only be capitalised if those are directly related to the construction of the asset, e.g. attributable to bringing the asset to conditions necessary for it to be capable of operating.
1.5. Capital building improvement that result in increase of the value or the life of an asset is recorded as an increase in the value of the building fixed asset according to the relevant capital internal order.
1.6. When PPE is donated or loaned to RMIT University, the department must recognise the asset at current market value and inform Financial Services of receipt of the asset.
1.7. Recognition and measurement
a) The cost of an item of property, plant and equipment will only be recognised as an asset if:
• it is probable that future economic benefits associated with the item will flow to the entity; and
• the cost of the item can be measured reliably.
b) Each item of PPE should be depreciated. Depreciation is calculated separately and is based on the useful life of PPE. Depreciation is calculated on a straight-line basis.
c) PPE stocktake is undertaken on a three-year progressive cyclical basis to ensure that proper control of RMIT’s PPE is maintained by staff and controlled by management of the University.
d) An independent valuation will be undertaken of all land and buildings at least every three years and artwork at least every five years to ensure that fair value is determined from market-based evidence.
e) Capitalisation must be conducted in accordance with the Asset Capitalisation Guideline.
f) Disposal of assets is conducted in accordance with the Asset Disposal Guideline.
a) If the carrying amount is increased or decreased as a result of revaluation, the increase/decrease is credited/debited to the asset revaluation reserve account or adjusted against the profit and loss account.
b) Full revaluation of buildings and land is performed every three years by the independent valuer. Annual book revaluation of buildings and land is performed by an independent valuer and the value is only adjusted in the Financial System if the overall increase is higher than 10% of the value of buildings and land.
1.9. Repairs and maintenance
a) Ongoing major cyclical maintenance programs are expensed.
1.10. Change of location, transfer and loan
a) In the case of a change of location, transfer to another area, loan to an outside institution or loan to an RMIT staff member, the department must notify Financial Operations. For transfer to another area an Asset Transfer Form and/or a general journal will be completed by Financial Services.
b) Loans to outside institutions/RMIT staff must have the prior approval of the Chief Financial Officer. It is the borrower’s responsibility to cover costs associated with removal and return, and to insure against losses. A Register of Asset on Loan Form must be submitted to Financial Operations, by individual areas for loans to outside institutions/RMIT staff. Where physical location codes are required, update the department’s Asset Register to record the staff member’s home address.
1.11. Storing and maintaining
a) Staff purchasing assets are responsible for ensuring that all asset purchases meet the relevant occupational, health and safety requirements. If there is any doubt over the safety of an asset proposed for purchase, seek technical advice from Human Resources.
2.1. All assets leased by RMIT will be capitalised as assets on the financial statements, unless:
a) it is a short-term lease (less than 12 months)
b) the leased item’s purchase price is less than $5,000.
A corresponding lease liability will be accounted for in accordance with relevant accounting standards.
2.2. At commencement of a contract, the responsible leasing area, in conjunction with Financial Operations, is required to assess whether the contract is a lease or includes a lease. Notification of a new lease to Financial Operations must be done in a timely manner.
a) A contract is a lease if the contract demonstrates the right to control the use of the leased asset, for a period of time, in exchange for payment.
2.3. Each leasing area will be responsible to provide Financial Operations with the necessary data required to capitalise the leased asset including, but not limited to the following:
a) copy of contract including TRIM number
b) description of leased item
c) start and end date of lease term including extension options
d) lease payment amount and frequency
e) lease payment review date and rate of increase, if applicabe
f) make good costs.
Any subsequent changes to the above information must be communicated to Financial Operations in a timely manner.
2.4. When an asset is leased under a peppercorn agreement to RMIT University, the responsible leasing area must provide the current market value of the leased asset and inform Financial Operations.
2.5. The relevant responsible areas of the leased assets are required to maintain a Leased Asset Register and be made readily available for Financial Operations to process the necessary accounting entries.
2.6. Each leased asset is depreciated based on the lease’s term on a straight-line basis.
2.7. Leased assets will be stocktaken on a yearly basis due to the mobility and volatility of the nature of the assets leased.
2.8. In the event of an early termination of lease or disposal of a leased asset, Financial Operations must be notified in a timely manner.
3.1. All intangibles purchased, leased or developed are recorded as a separate class of assets in the Fixed Assets Register maintained within the Financial Services Group.
3.2. An item is recognised as an intangible asset if it meets the following definition and recognition criteria:
a) identifiable (capable of being separated/sold/licenced/transferred separately or as a part of the contract) and without physical substance
b) it is controlled by RMIT
c) probable that future benefits will flow to the University
d) cost of the asset can be reliably measured.
3.3. Financial Operations must agree that the definition and recognition criteria are met prior to an intangible asset being created.
3.4. An intangible asset is amortised on a straight-line basis over its estimated useful life from the date it is available for use but to a maximum period of four years. Useful life of an asset must be reviewed and confirmed for year-end reporting.
3.5. Impairment of intangible assets must be assessed by the individual area that created an asset at each reporting date. An asset is impaired when its carrying amount exceeds its recoverable amount. Recoverable amount is the higher of an asset’s fair value less costs to sell and value in use.
3.6. Capitalisation of intangible assets
a) Capitalisation must be conducted in accordance with the Asset Capitalisation Guideline.
b) The minimum amount for capitalisation is $500,000.
• Higher restrictions are applicable to the capitalisation of Cloud solutions. Financial operations must be consulted at the assessment stage of the project.
• Software as a service (SAAS), where a third party provides the application and manages the application and platform, with RMIT having access to the application e.g. Cloud software licence agreements, are generally considered service contracts and expensed.
• Employee benefits can only be capitalised as part of an intangible asset if such expenses are directly attributable to bringing the asset to its working conditions.
a) PPE must be kept with due regard for safety and security and maintained in good working order.
b) Maintenance, control and safety of PPE remain the responsibility of the individual departments.
c) All surpluses, unserviceable or obsolete PPE should be disposed of without undue delay.
6.2. Leased assets
a) Leased assets must be kept with due regard for safety and security and maintained in good working order.
b) Responsible areas of the leased assets are responsible for ensuring that all leased assets meet the relevant occupational, health and safety requirements. If there is any doubt over the safety of an asset proposed for purchase, seek technical advice from Human Resources.
c) Maintenance, control and safety of Leased assets remain the responsibility of the individual departments.
6.3. Intangible assets
a) Maintenance and control of intangibles remain the responsibility of the individual departments.
b) All surpluses, unserviceable or obsolete intangibles should be disposed of without undue delay.
Exclusions are only acceptable when local financial legislation conflicts with RMIT University’s policy. Exceptions must be reported to the Chief Financial Officer for reporting and consolidation purposes.
An asset that is not physical in nature.
A rented or hired asset with a lease term longer than 12 months and a purchase value for the leased item greater than or equal to $5,000.
Examples include, but are not limited to:
A very small, nominal or token amount (usually $1) given to satisfy the requirements for the creation of a legal contract.
Property, plant and equipment (PPE)
Property, plant and equipment with a capitalisation value as approved by the management of the University on an annual basis and with a useful life over one year:
|Version||Approval date||Effective date||Summary of changes||Approval authority|
|1.0||27 July 2017||7 August 2017||New procedure||Deputy CFO - Financial Control|
|1.1||15 October 2018||22 October 2018||Minor amendment||Deputy CFO - Financial Control|
|1.2||17 January 2019||21 January 2019||Minor amendment and alignment to Policy Governance Framework||Deputy CFO - Financial Control|
|1.3||20 February 2019||26 February 2019||Minor amendment to 1.8 (b)||Deputy CFO - Financial Control|