Local Government: 2015–16 Audit Snapshot

Tabled: 24 November 2016

Appendix E. Asset valuations

Figure E1 shows the key elements of an effective asset valuation framework for councils. Part 4 discusses the results of our analysis of the 79 councils according to this framework.

Figure E1
Key elements of an effective asset valuation framework

Elements

Policy

Measurement and valuation of non-current physical assets policy and guidelines exist and:

  • contain an objective
  • specify the scope of the policy
  • specify the frequency the policy should be reviewed and updated
  • require assets to be valued at a component level
  • specify the valuation approach for determining fair value
  • refer to applicable financial reporting framework and its requirements
  • are comprehensive.

Policy and guidelines are approved.

Management practices

Terms of engagement with the appointed valuer documented and agreed with management, and aligned with the requirements of the exercise.

Comprehensive and regular reporting to management and audit committee.

Reasonableness of the valuation result assessed considering:

  • appropriateness of sample selection, sample size and mix of physical and desktop assessments
  • appropriateness of the unit costs/indices applied
  • asset condition considered when assessing useful lives
  • reasonableness of the movement in asset value given management understanding of the assets.

Recommendation by management to the audit committee and council regarding adoption of valuation results.

Periodic review by management of policy, procedures and practices.

Governance and oversight

Policy and procedures approved by the audit committee.

Periodic review of policies by management and audit committee.

Internal audit used to review policy, processes and practice periodically.

Source: VAGO.

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