Part B Section: 2- Asset Management Page 1 of 5

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1 Section: 2- Asset Management Page 1 of 5 2- Asset Management 1.0 Purpose 1.1 To maintain complete and accurate accounting for fixed assets. 1.2 To ensure that fixed assets are safeguarded. 1.3 The physical control and accounting for assets is the responsibility of the Head of the Ministry, Office or Island Administration. 2.0 Mandatory Requirements 2.1 All fixed assets are to be recorded in the asset register of the Ministry, Office or Island Administration A separate section be allocated to each of the following: Plant, property and equipment This should be split into: office equipment and computers, furniture and fittings, plant and equipment, buildings, motor vehicles and building/leasehold improvements Infrastructure Assets Split by harbours/ports, airports, roading, water Intangible Assets Split by software developed in-house, purchased software, other Work in Progress should be split between each of the categories above as appropriate. 2.2 The asset register shall agree in total to the general ledger balance. An annual stocktake should be undertaken to ensure this is the case so that when annual accounts are produced (refer to Part D, Section 5), the ledger and the FAR are in complete agreement. 2.3 Differences identified in the annual fixed asset stocktake between the physical count of assets and the asset register shall be referred in writing to the Financial Secretary to be dealt with appropriately eg. write offs etc 2.4 Any alteration of asset values is only to be carried out with the approval of the Financial Secretary. 2.5 Any purchase or sale of assets must follow Part D Section 2 - Purchase & Sale of Goods & Services and Part D Section 3A Public Tendering Sale of Assets.

2 Section: 2- Asset Management Page 2 of Any disposal of fixed assets must follow Part B Section 10 - Disposal of Fixed Assets. 2.7 All fixed assets are to be stored securely at all times. 2.8 All fixed assets are to be kept on the Ministry, Office or Island Administration s premises. Public assets are not to be held privately. 2.9 All fixed assets of the Ministry, Office or Island Administration will be the responsibility of the HOM. A HOM will be responsible for any asset misplacement/mismanagement etc. 3.0 Process 3.1 All capital expenditure will be reflected as an asset in the Fixed Asset Register. These items will be subject to depreciation refer to Part B Section 4 - Depreciation. This also applies to items obtained under a capital appropriation for less than $3, If assets are purchased through operating expenditure (ie expensed assets) they must still be entered into the FAR (most likely the Plant, Property, and Equipment section in above) but under a separate split labeled Expensed Assets. These assets are not depreciated but are on the FAR to assist in accountability purposes and for the Audit Office to verify. 3.3 All Fixed Assets must be separately identifiable and if they are not they should have a Fixed Asset Control Number and be tagged or marked (See Section 3.9 below). 3.4 All Fixed Assets will be subject to an annual stock take (refer to Stocktake Procedures Part D, Sectrion17). 3.5 Differences identified in the annual stocktake between the physical count of fixed assets and the Fixed Asset Register shall be notified in writing to the Financial Secretary. 3.6 Where no value is known, a certified professional (eg mechanic) should be hired to value those capital items the Ministry does not have knowledge of. 3.7 Asset revaluations are not permitted under the Accounting Policies adopted by the Crown However, assets should be regularly subject to an impairment test. This is where an asset s value is reduced due to unanticipated wear etc. In this case, the change in value is written off to the P&L through the following entries: 3.8 Fixed Asset Register Dr Impairment of Assets (P&L) Cr Asset Cost Attachment 1 shows an example of the layout and content of a Fixed Asset Register.

3 Section: 2- Asset Management Page 3 of The Fixed Assets Register includes all assets that are in use (or have a book value). Note assets that are in use and have a zero book value should still be included in the Fixed Assets Register The Fixed Assets Register is reconciled to the following General Ledger accounts by asset category: Cost of Fixed Assets Accumulated Depreciation Current year depreciation 3.9 Fixed Asset Control Number All fixed assets need to be uniquely identifiable. One way of achieving this is by using a fixed asset control number upon the purchase of the item. This number may take the form of marking, engraving, stencil, self adhesive metal tags or other suitable tags that can be pre-numbered and affixed to the asset Only items of equipment and furniture will need to be physically tagged with fixed asset control numbers. For control purposes, fixed assets such as buildings are assigned sequentially numbered fixed asset control numbers. Registration plate numbers and serial numbers can be used for unique identification The fixed asset tag shall then be recorded in the Fixed Asset Register with all of the associated details including asset description, manufacturer s serial number, transportation costs and installation costs if applicable. For example the purchase of an air conditioner may originally cost $3,000 but in addition may also include transportation costs of $300 and installation costs of $250, therefore the total cost of the fixed asset in the asset register and subject to depreciation is $3, All unused fixed asset control tags shall be kept in a secure location Fixed Asset Stocktake For detailed instructions, refer to Part D, Section All fixed assets shall be subject to an annual stocktake by the Ministry, Office or Island Administration to ensure the existence, security and condition of each item. This stocktake shall then be reconciled to the asset register. Any proposed adjustments shall be referred to the Financial Secretary This stock take shall be conducted either as part of the annual closing process (June 30) or on a cyclical basis during the year. In all instances documentation must be maintained of what was counted and by whom as shown within attachment 2 - 'Fixed Asset Inventory' form. The HOM, Chief Executive or Island Secretary must sign the 'Fixed Asset Inventory' form.

4 Section: 2- Asset Management Page 4 of 5 Attachment Attachment 1 - Fixed Asset Register Example Attachment 2 - Annual Stocktake Form

5 Section: 2- Asset Management Page 5 of 5 Example of a Fixed Asset Register A B C D E F G H I J K L M N O Date of Asset ID Item Description Expensed Opening Additions Disposals Closing Depn Annual Opening Depn Accum Closing Net Book Purchase Assets Cost Cost Rate Depn Accum Depn on Accum Value Depn disposals Depn Category Key A B C D E Records the month and year of purchase. Unique Identification of the Asset (eg Number Plate, Asset Number etc) Provides a reasonable enough description for the asset to be easily identified. The assets purchased from operational funding (which must be less than $3,000) are recorded here at cost. No other cells in this row are filled in. This is the opening cost of an asset purchased in a previous financial year. The value in this cell should equal the closing cost value from the previous year. F New assets purchased during the year (as per a specific capital expenditure appropriation) are recorded in this column. Do not enter purchases during the year into E. G When an asset is disposed of, the cost of that asset, as recorded in either column E or F is entered here into G. H H is a summing column, and equals E + F - G. I J K L M N This column records the depreciation rate as set out in the relevant procedure. J is the sum of H x I. This column provides the annual depreciation expense to be used when budgeting for the following year. Remember to delete any value from this cell when an asset is fully depreciated. The closing accumulated depreciation from the previous year becomes the opening accumulated depreciation for the current year. Like Column E, the value in this cell must agree to what the closing accumulated depreciation was in the previous year. Where an asset has an opening cost (E), this cell should be set to calculate J, the yearly depreciation expense. If the asset is purchased part way through the year the depreciation should be calculated from the time of purchase to the year end. If being disposed, adjust what was in this cell (which would have been depreciation for the full year) to reflect the depreciation only up until the date of disposal. When an asset is being disposed, it will have an accumulated and current depreciation value. Adjust the depreciation (cell L) as noted above to reflect the depreciation only up until the date of disposal. Enter into M the combined value of K and L, but as a negative. N is another summing cell. It sums K + L + M. The column M is added because the cells contain negative values. O O is also a summing cell. H - N = O. At the end of the financial year, save this version as the Fixed Asset Register for that year and then save it again as the Fixed Asset Register for the next financial year. It then becomes the Fixed Asset Register for the new year. Write over all of the values in E with the ones that are in H, and delete all of the values in F and G. This establishes the opening cost, which equals the previous years closing cost. Write over all of the values in K with the ones from N, thereby establishing the opening accumulated depreciation which agrees to the previous years closing. For assets that were disposed of in the previous year, delete the whole row. This deletes all values in column M. Assets that were purchased during the last year need to have the depreciation column (L) adjusted to be a full year rather than the part year depreciation that will be in that cell. The register now reflects what the current year ends position will be, and only needs to be updated when a new asset is purchased or an existing asset is disposed of. Cook Islands Government Financial Policies & Procedures Version: August 2011

6 Section: 2- Asset Management Page 6 of 6 Asset Stocktake Form Page No: of Ministry: Supervisor of Stocktake: Assistant: Date of Stocktake: Signature: Signature: Asset ID Description No of Items Condition Location Head of Ministry Signature: Date: Cook Islands Government Financial Policies & Procedures Version: August 2011