ID FINANCE

MANAGEMENT OF ASSETS UNDER CONSTRUCTION - INFRASTRUCTURE

DIVISION

ID Finance

3 May 2013

Overview

What are CFI’s obligations in relation to:

Demolition of assets;

Management and recording assets under construction and project expenditure during the course of project delivery;

Rolling out Assets Under Construction.

Demolitions

Timely demolition notification is problematic Results in audit findings as asset balances are incorrect

The ‘Notification of Asset Demolition/ Write-Off’ form must be completed by the project and provided to CFI Finance team on demolition of asset

…..and must be approved by SES Band 1 or above (DGCFI or HI).

http://intranet.defence.gov.au/dsg/sites/chkDoc.asp?S=1208&D=88961&URL=docs/demolition-write_off_form.xls

Expense or Asset??

ExpenseDecontamination

Demolitions

Scoping studies

Environmental assessments

Rework – where no increase in capability of asset

Asset (Capitalise to AUC) Design

PMCA fees

Site Preparation

Contractor/consultant costs attributable to the construction of buildings/infrastructure

Purchase of minor equipment (office furniture and fitouts etc) - 04

ICT hardware/software – 06

Critical travel

Decontamination

Accounting Standards requirement to record a provision for decontamination of Defence property as part of the annual financial statements.

CFI contribution: Notification of contamination – forecast cost to decontaminate Track expenditure on decontamination activity (separate WBS element within project and GL account 25058)

Mirjana Zec in EE Branch – finance person responsible for managing the provision for decontamination for all of Defence.

AUC Rollouts

Assets under Construction must be rolled out when the asset is available for use.

• For buildings this may be indicated by the Certificate of Occupancy being achieved and meeting required compliance standards.

This means rollout of assets throughout the term of the project, not just at the end. (Note that rollouts to the same asset shell can occur more than once)

Forms to be provided (electronically) to CFI finance team for notification of rollout must include:

- Notification of completion – signed by Project Mgr- Completed rollout form (separate form for each asset class, i.e. buildings, infrastructure, ICT)

Focused Improvements….

1. Asset delivery schedule for each project-To be monitored regularly by project and finance support team.

2. Create Work Breakdown Structures for projects which are reflective of how the project will be delivered. If possible, assign a particular WBS element to delivery of an individual asset

- PMCA to align their reporting to our module…

3. Timely rollout of assets as individual assets for projects are delivered and put into use.

4. Ensure WBS element is created and used for decontamination on every site.

ANAO Audit 2012-13

Focus on all the aspects of asset and AUC management: Impairment Rollouts Correct recording of project expenditure Write off of demolished assets

Governance Reports

No audit samples have been received at this stage, however, focus will be on projects which have:

Indicators of impairment; or Delayed rollouts; or Undergone contractor insolvency period; or Have received liquidated damages.

Help and Support

Creating an appropriate WBS to suit the project delivery objectives

Advice on expense vs. capital costs for projects

Assistance with determining asset rollout values

Notification of demolition forms

Audit liaison and support

Further information…

We are here to provide the financial expertise to ensure you get the right advice.

Contacts:Ariana King 626 68576A/Director ID Finance

CFI Finance Team:Dianne GillardCraig AngusKim Evans

QUESTIONS ?