Accounting Policies and Procedures Manual
Accounting Policies and Procedures Manual
Accounting Policies and Procedures Manual
Procedures Manual
1 Purpose ............................................................................................................................. 1
2 Scope ................................................................................................................................ 1
3 Definitions.......................................................................................................................... 1
4 Legislative and Corporate Requirements .......................................................................... 1
5 Policy Statement ............................................................................................................... 2
6 Application of Policy .......................................................................................................... 2
7 General Financial Transactions......................................................................................... 3
7.1 Accounting/Bookkeeping ....................................................................................... 3
7.2 Monies Received ................................................................................................... 3
7.3 Banking .................................................................................................................. 4
7.4 Petty Cash ............................................................................................................. 4
7.5 Bank Accounts ....................................................................................................... 5
7.6 Investment ............................................................................................................. 6
7.7 Debtors ..................................................................................................................7
7.8 Debt Collection ...................................................................................................... 7
7.9 Provision for Doubtful Debts .................................................................................. 8
7.10 Bad Debts/Write Offs ............................................................................................. 8
7.11 Credit Cards ........................................................................................................... 8
7.12 Purchase Cards ................................................................................................... 10
7.13 Accounts for Payment and Disbursements .......................................................... 11
7.14 Loans/Borrowings ................................................................................................ 12
7.15 Fringe Benefits Tax .............................................................................................. 12
7.16 Goods and Services Tax ..................................................................................... 13
7.17 Auditor Policy ....................................................................................................... 13
7.18 Annual Budget/Annual Business Plan ................................................................. 13
7.19 Loans to Third Parties.......................................................................................... 15
8 Purchasing, Quotations and Tenders .............................................................................. 16
8.1 Background.......................................................................................................... 16
8.2 Purchase of Property, Goods and Services ......................................................... 18
8.3 Quotations and Tenders ...................................................................................... 21
8.4 Confidentiality ...................................................................................................... 26
8.5 Contracting Out .................................................................................................... 26
9 Salaries and Wages ........................................................................................................ 27
9.1 Payroll ..................................................................................................................27
10 Accounting for Council Assets - Property, Plant, Equipment & Infrastructure ................. 29
10.1 Definition of an Asset ........................................................................................... 29
10.2 Initial Recognition ................................................................................................ 29
10.3 Subsequent Recognition and Revaluation ........................................................... 30
10.4 Materiality & Capitalisation Threshold ................................................................. 30
10.5 Depreciation and Useful Life ................................................................................ 31
10.6 Residual Value ..................................................................................................... 32
10.6 Impairment ........................................................................................................... 33
10.7 Disposal ............................................................................................................... 33
10.8 Classifying Operating/Capital Expenditure .......................................................... 37
1 Purpose
1.1 The Accounting Policies and Procedures Manual (the Manual) documents the Internal
Control adopted by Council to safeguard assets, secure the accuracy and reliability of
accounting data and financial reporting and promote operational efficiency.
2 Scope
2.1 The Manual covers accounting, financial reporting and financial governance activities
of Council.
3 Definitions
3.1 Definitions within this Manual are consistent with Australian Accounting Standards.
5 Policy Statement
5.1 It is Council policy:
5.1.2 To implement and maintain a system of control to assist Council to carry out
its activities in an efficient and orderly manner, ensure adherence to policies,
safeguard Council’s assets and financial sustainability, and secure the
accuracy and reliability of its records.
6 Application of Policy
6.1 The Manual brings together those policies and procedures that relate to the
accounting activities of City of Prospect.
6.2 To maximise the accuracy and reliability of Council records, internal control
procedures will support controls which emphasis the following:
6.2.5 Access to, and security of, cash, assets and other Council resources
7.1.1 Council accounting records will be maintained on a full accrual basis using
up to date methods of electronic data processing.
(5) Other records necessary to fully document and explain the financial
transaction of Council as required to comply with the Local
Government Act, 1999 (“the Act”) and Regulations in relation to other
financially expressed obligations, (for example, budgeting and annual
reporting)
7.1.3 Subsidiary ledgers shall be reconciled with the general ledger at least
monthly.
7.1.5 The Manager Financial Services to sight and review all receipt reversals,
journals, credit notes, reversal of rates journals and alterations to
parameters of the rating system.
7.1.6 Employees working within the accounting function will have the capabilities
and training, commensurate with their responsibilities.
7.2.2 The payer shall be issued with a receipt/tax invoice upon request.
7.2.3 The receipt/tax invoice record shall indicate the mode of payment, i.e.
cheque, cash, EFTPOS etc.
7.2.6 Details of each receipt shall be retained for the period prescribed by the
State Records Act, 1997.
7.2.7 Details of each voided or reversed receipt shall be retained for the period
prescribed by the State Records Act, 1997.
7.2.8 Cash floats may be issued to a cashier for use as change for monies
received.
7.2.9 Mail will be opened centrally in the presence of two (2) employees.
7.2.10 Cheques and cash received through the mail will be forwarded to the
Customer Services Officer for receipting and banking. Cash received must
be logged in Cash Received Register.
7.3 Banking
7.3.7 During peak rates periods, banking will be carried out on a daily basis to
ensure that cash held on the premises is limited.
7.3.8 Cash held on the premises overnight shall remain insured to the value of
$100,000 as per Council’s insurance policy.
7.3.9 Cheques over $25,000 will be banked on the day received where possible.
7.4.1 Cash payments may be made out of a petty cash account established by
Council for expense reimbursement only. Cash advances are not permitted
unless authorised by the Manager Financial Services.
HACC $ 300
$3,050
7.4.6 Petty cash vouchers are subject to Council’s Procurement Policy and as
such require signature by an Authoriser delegated under that Policy.
7.4.7 Petty cash transactions shall be recorded and supported by petty cash
dockets and receipts (or statutory declaration where receipts can not be
provided).
7.4.8 The recipient of the petty cash will be required to sign a petty cash docket
and provide supporting documentation when claiming.
7.4.9 The recipient of cash must not be the Authorising Officer, even if the staff
member has delegated authority. The recipient must have a more senior
delegated officer or one of equal authority sign the petty cash form.
7.4.10 Receipts presented to support petty cash purchases must quote the
suppliers ABN and/or be a tax invoice where appropriate.
7.4.12 All responsible officers who administer petty cash must ensure they are
fully aware of their responsibilities for safeguarding petty cash and have
read and understood the petty cash policy and procedures.
7.4.13 Receipts which do not end in round dollars will need to be rounded when
reimbursed via petty cash. The following approach will be taken in such
instances:
7.5.1 Bank accounts will be operated exclusively for the purpose of conducting
Council business.
7.5.4 All accounts will be in the name of City of Prospect. New accounts can
only be opened with the approval of the Chief Executive Officer and
Director Corporate Services..
7.5.5 Bank reconciliation for each bank account operated by Council shall be
prepared weekly..
7.5.6 Transactional banking is presently carried out through the ANZ Bank.
Banking trends and costs will be monitored by the Manager Financial
Services and this relationship will be maintained unless determined
otherwise by Council resolution.
7.6 Investment
(1) Council must avoid investments that are speculative (Section 139)
(4) Council must not directly acquire shares in a company. Council are
not however, precluded from investing money in managed funds
which invest in shares. (Section 47)
(5) Council employees will be protected from civil liability for an honest
act, or omission, in the exercise of their duties (Section 121)
7.6.2 Investment of Council’s surplus funds will be with the Local Government
Finance Authority unless determined otherwise by Council resolution.
7.6.3 Investment performance will be reviewed at the end of each financial year,
and the outcome will be reported to Council.
7.6.4 For further details refer to Section 14 - Treasury Management Policy in this
Manual.
7.7 Debtors
7.7.2 Staff will complete a Debtor Invoice Request Form (DIRF) immediately an
amount becomes due and payable, and forward it to the finance section.
7.7.4 Tax Invoices numbers will be system generated and issued in numerical
sequence and meet ATO legislative requirements.
7.7.5 Records shall be maintained for all debtors and transactions relating thereto.
7.7.6 Debtors have 30 days from the date of invoice before the amount is
considered “overdue”.
7.8.1 The policy does not apply to the collection of rate or infringement related
debts but extends to specific user pay services such as licences and leases
on sporting clubs and hall hire.
7.8.2 Council will apply prudent debt management practices. Outstanding debtor
balances shall be reviewed at least monthly and appropriate action initiated
to recover debts. This will include:
7.8.3 Council must ensure that debt is managed in a way which is fair and
equitable to the debtor and efficient for both parties. Council acknowledges
that a debtor’s financial circumstances can change. As a result, if financial
difficulties are experienced or are anticipated, a debtor is encouraged to
promptly initiate discussions with Council to seek alternative arrangements.
7.8.4 Should the debtor fail to meet the payment terms without having made
contact with Council regarding difficulties, Council will invoke its standard
debt recovery procedures to ensure a fair, equitable and consistent
approach to all debt follow up. At all times consideration will be given to the
amount overdue and the circumstances of the debtor.
7.8.5 Infringement Debts will be referred to the Fines Collection & Recovery Unit
of the Attorney General’s Department for recovery.
7.9.1 A provision for doubtful debts will be established for aged debts greater than
150 days, taking into account:
7.9.2 Aged debts less than 150 days may be provided for if the recovery is known
to be unlikely.
7.9.3 Outstanding debtor balances shall be reviewed annually towards the end of
each financial year to ensure doubtful debts are adequately provided for.
7.10.1 Debts shall be written off only when all reasonable attempts at recovery
have been taken and failed. Recommendation for write off shall be made by
the Finance Department following discussion with the section responsible for
the raising of the invoice.
7.10.2 Debts that are considered irrecoverable, or where the cost of recovery is
uneconomic, shall be written off as a bad debt.
7.10.3 The power to write off such debts is delegated to the Chief Executive Officer
or sub-delegated.
7.11.1 The Chief Executive Officer, Directors and Authorised Officers maintain
Council owned credit cards.
7.11.2 The corporate credit card recipient must comply with the conditions of use as
set out in the “Credit Card Agreement” and “Acknowledgement by
Cardholders” that must be signed before the card is issued. This document
details limits on usage and conditions relating to documents required to
support credit card transactions.
7.11.3 Expenditure on credit cards will be limited to the maximum credit balances
as follows:
7.11.4 All Credit Card Statements must be approved by the Chief Executive Officer.
7.11.5 The CEO Credit Card Statement must be approved by the Director
Corporate Services & Major Projects.
7.11.6 Credit card expenditure must be signed by the card holder and supported by
the appropriate documentation and be submitted to the Accounts Payable
Officer for reconciliation with the statement of account.
7.11.7 The cardholder will ensure that a satisfactory description of the goods
purchased is on the sale docket/tax invoice.
7.11.8 In the event the cardholder is unable to produce a valid tax invoice / receipt,
a statutory declaration must be submitted by the cardholder confirming that
the nature of the item purchased, the item was work related expenditure and
the reason a tax invoice or receipt was not provided.
7.11.12 The cardholder will not permit use of the card by another person except for
work related expenses incurred with prior approval.
7.11.15 Where a credit card is lost or stolen, the cardholder must immediately report
to the Bank for cancellation.
7.11.16 Any staff member who does not comply with the conditions of use, will have
the cards withdrawn & may be subject to disciplinary action.
7.11.17 The cardholder must return the card should they cease to be an employee of
City of Prospect or when so directed by the CEO.
7.11.19 Reconciliation of Credit Card Statements must be completed by the 15th day
of each month.
7.12.1 The usage of purchase cards enables Council to procure necessary small
value goods in an efficient manner.
7.12.2 A written request detailing the proposed cardholder, reason for the
establishment of the card, card limit and manager approval must be
submitted to the Manager Financial Services for approval prior to issuance
of a card.
7.12.3 The purchase card recipient must comply with the conditions of use as set
out in the “Acknowledgement by Purchase Cardholders Form” that must be
signed before the card is issued. This document details strict limits on
usage, conditions relating to documents required for records maintenance
purposes and authorisation requirements.
7.12.4 Purchase cards should replace the usage of petty cash where possible.
7.12.5 Purchase cards cannot be used for non work related purchase under any
circumstances.
7.12.6 Types of purchase cards approved for usage include, but are not limited to: -
Coles, Officeworks, Bunnings and Prospect Plaza Foodland.
7.12.9 The Manager Financial Services has the discretion to approve the issuance
of purchase cards based upon:
(1) Number of purchase cards held within the relevant team at time of
application
(4) A review of the capacity of the proposed cardholder to meet the card
holder responsibilities listed in the ‘Acknowledgement by Purchase
Cardholders Form’.
7.12.10 The Manager Financial Services has the discretion to withdraw a purchase
card from a Council Officer in the event the ‘Acknowledgement by Purchase
Cardholders Form’ is breached in any manner.
7.12.11 Purchase card holders must notify the card provider organisation
immediately in the event of a lost or stolen card.
7.12.13 It is the responsibility of the cardholder to return the purchase card to the
Manager Financial Services in the event the card is no longer required (eg.
termination of employment).
7.13.1 All accounts for payment shall be certified by an Authorised Officer as to:
(1) The receipt of the goods and services being in accordance with the
relevant official purchase order
7.13.3 An Elected Member is entitled, at any reasonable time to inspect the record
of accounts paid or payable.
7.13.6 Unused cheques shall be stored securely by the Accounts Payable Officer
who shall maintain an up to date register. This register is required to be
sighted and approved by the Manager Financial Services on a monthly
basis.
7.13.7 Documentation regarding disbursements shall be retained for the period set
down prescribed by the State Records Act, 1997.
7.14 Loans/Borrowings
7.14.1 Council has determined as policy that there will be no new borrowings
unless approved for essential asset replacement/renewal and/or
extraordinary items.
7.14.3 Loans raised by Council will be separately accounted for and be identifiable
in the accounting records.
7.14.5 Borrowings will be through the Local Government Finance Authority by way
of debenture loans unless separately determined by Council.
7.14.6 A loan servicing and debt reduction schedule will be submitted during
consideration of the annual budget or when considering a loan rollover.
7.14.7 For further details refer to Section 14 - Treasury Management Policy in this
Manual.
7.15.1 Fringe Benefits Tax (FBT) is paid on benefits in place of, or in addition to,
salary or wages of employees.
7.16.1 The Goods and Services Tax (GST) is a broad-based consumption tax of 10
per cent on most supplies of goods and services consumed in Australia.
7.16.4 There are other types of supplies where GST does not have to be included
in the price. These are called input taxed supplies and GST-free supplies.
7.16.5 City of Prospect will keep a register of Fees and Charges and their relevant
GST applicability which is reviewed yearly.
7.16.6 Council will only deal with suppliers who have an Australian Business
Number (ABN) or suppliers who are prepared to sign a “Statement by
Supplier” tax declaration. A register will be kept of all suppliers who have
signed this declaration.
7.16.7 For purchases of goods and services exceeding $82.50 and which attract
GST, Council must obtain a complying Tax Invoice. For amounts less than
$82.50 an account detailing items supplied with total GST is sufficient.
7.16.8 All invoices for Council supplies exceeding $82.50 and which attract GST
must be complying Tax Invoices.
7.16.9 Monthly remittances of GST received and paid will be submitted on Council’s
Business Activity Statement (BAS). Amounts will be netted off against other
tax office liabilities/receivable such as PAYG/Fuel Tax Credits and Fringe
Benefits Tax. The BAS is used by Council to report its GST related
obligations and will be submitted by the 21st day of each month.
7.18.1 Council will adopt an Annual Budget after 31 May and before 31 August for
the ensuing financial year. The budget will deal with each activity on a
separate basis and must comply with the standards and principles
prescribed by regulations under the Local Government Act, 1999.
7.18.2 As part of the budget process Council will prepare an “Annual Business
Plan” which will address the activities Council intends to undertake in the
ensuring year to achieve its objectives and the key performance indicators
that Council will use to assess its performance against its objectives.
7.18.3 The following budget principles will underpin the budget development:
(5) Meet Long Term Liabilities - and ensure appropriate funding for
infrastructure provisions
(9) Asset Sales and Debt - will ensure the operations do not rely on asset
sales to fund core services. Debt will be used as a strategic tool to
fund infrastructure needs
7.18.4 The budget performance will be reviewed each year by the Manager
Financial Services as per Section 7 of the Local Government (Financial
Management) Regulations 1999.
7.18.5 The Manager Financial Services will present to Council, a report that
compares budgeted performance to actual performance with explanations
for significant budget variances.
7.18.6 Council is solely responsible for approving any change to Council’s budget.
7.18.7 The Council will consider Budget Carry Overs at the Third Quarter Budget
Review to ensure their consideration for inclusion in the Original Budget for
the following year.
7.18.8 Operating Budget Items will not be considered unless directly funded from a
tied Grant.
7.19.1 Council is not in the business of providing financial security to third parties
through the lending of finances, nor is it a registered financial institution.
7.19.2 Council from time to time may provide financial loans to local based
organisations adding to the community of the City of Prospect.
7.19.3 The Local Government Act 1999 Section 139 precludes council from making
investments into businesses or operations of a business for profit nature.
Consequently Council will only consider applications that support the
community at large.
7.19.4 An application for a community loan will only be considered where there are
no other funding options and evidence is provided to demonstrate that other
options have been sort and exhausted.
7.19.7 The purpose of the loan must be deemed to be one which provides a direct
benefit to the residents of the community, responds to a community need
and is consistent with Council’s Strategic Plan.
7.19.8 The project must be a new project. Refinancing of existing commitments will
not be considered.
7.19.9 The Council may either go guarantor or provide financial support through the
advancing of funds to a community based organisation.
7.19.10 A community loan will only be approved where there is strong evidence that
loan repayments can feasibly be met and that Council’s level of risk is
ascertained to be minimal. Updated financial records to evidence this may
be requested periodically through the life of the agreement.
7.19.11 All approved community loan applicants will be required to enter into a
written agreement with Council.
7.19.12 In the event of a loan, Council will seek security from its debtor. The
preferred method is via an asset residing on Council owned land.
7.19.13 Interest rates and repayment terms will be set by the Council in a consistent
manner on a case by case basis.
7.19.14 The Elected Body of Council may only give authorisation to the advancing of
funds but may delegate to the Mayor or Chief Executive the power to sign
loan documentation.
8.1 Background
8.1.1 A council must prepare and adopt policies on contracts and tenders,
including policies on the following:
(2) competitive tendering and the use of other measures to ensure that
services are delivered cost-effectively
(1) identify circumstances where Council will call for tenders for the
supply of goods, the provision of services or the carrying out of
works, or the sale or disposal of land or other assets
(2) provide a fair and transparent process for calling tenders and entering
into contracts in those circumstances
(3) provide for the recording of reasons for entering into contracts other
than those resulting from a tender process
8.1.3 A council may at any time alter a policy under this section, or substitute a
new policy or policies (but not so as to affect any process that has already
commenced).
(2) facilitates achieving value for money in the acquisition through the
most appropriate provider
8.1.7 Council will strive to achieve value for money in its procurement activities.
Achieving this requires a comparative analysis of all the relevant costs and
benefits of each proposal throughout the whole procurement cycle.
8.1.8 Cost is not the only factor in assessing and determining value for money.
Other factors for consideration include:
(4) flexibility to adapt to possible change over the lifecycle of the property
or service
(6) anticipated price that could be obtained, or the costs that may be
incurred at the point of disposal
8.1.9 Council staff will select the method of approaching the market which is best
suited to the procurement. Determining the best method in the
circumstances will be based on consideration of the following issues:
(4) whether the market for the procurement is known and the capacity of
the market to provide the procurement
(c) respect all in-confidence information received and not use it for
personal gain, or to prejudice fair and open competition
8.2.3 Council staff will maintain a list of preferred suppliers who have
demonstrated high quality, dependable, value for money, documented
OHS&W policies and sound environmental sustainability practices.
8.2.4 The following persons have delegated authority to sign purchase orders for
the purchase of goods and services on behalf of Council:
Suggested Approach to
Market
Authority to Purchase
Purchase of when:
Or Delegated
Goods and - not within budget
Purchasing
Services or
Selection of Authority
(General) - not choosing the
Appropriate
lowest quote/tender
Procurement Process
(refer section 8)
A. Less than Designated Leadership Team
$1,000 Staff
Member(s)
(2 verbal/
written quotes)
$3,001 to
$10,000 in
value
(1 verbal /
written quotes)
(3 verbal/
written quotes)
Suggested Approach to
Market
Authority to Purchase
Purchase of when:
Or Delegated
Goods and - not within budget
Purchasing
Services or
Selection of Authority
(General) - not choosing the
Appropriate
lowest quote/tender
Procurement Process
(refer section 8)
(3 written three written quotations.
quotes) Quotations must be
authorised by the
Director
8.2.7 The purchase of goods and services by City of Prospect shall be made in
accordance with the following criteria:
(b) Suppliers which are local to Prospect where the goods offered
are equal to competitive bids
8.2.8 Council will consider paying a “premium” of up to 5% for those goods and
services supplied by:
(1) All facets of the supplier’s offer including price, quality, useability,
environment procurement and sustainability, delivery and the
willingness of the supplier to accept Council’s terms and conditions of
purchase
(3) The expected life, anticipated running and maintenance costs, the
willingness of the supplier to guarantee ready availability of parts and
servicing and the likely disposal value of equipment offered
8.2.11 In addition to the above policies the following principles will be applied:
(2) Council must be, and must be seen to be, a fair and even-handed
purchaser by all existing and potential suppliers, ratepayers and the
public
The tender period may be extended where the Director can show sound
cause. Tenderers are to be notified of any change in closing date and time.
(2) Tenders received before the closing date must be placed in a locked
tender box under the control of the Customer Service Coordinator or
other person/premises as may be delegated by the responsible
Director
(3) Where it is not possible to place all tenders and supporting papers in
the tender box, tender papers not placed in the tender box shall be
endorsed by the responsible Director with details of receipt and
placed in the safe under the control of the Customer Service
Coordinator or other person/premises as may be delegated by the
responsible Director
(5) Tenders received through the post must be endorsed with the exact
time of receipt. When envelopes containing tenders have been
opened due to lack of identification, they should be immediately
(1) At close of tender, the tender box should be opened and emptied to
prevent lodgement of late tenders in the box
(2) The tender box shall be opened by the responsible Director or such
other person as delegated by the responsible Director together with
one of the following:
(3) The date and time of opening the tender document will be marked on
the tender and both persons present will sign the document. All
tender forms, accompanying letters and schedule of prices must be
numbered and initialled by both persons present. Other papers
submitted such as schedules, technical data and brochures must be
endorsed with the tender number
(5) For tenders opened at locations other than the Civic Centre (refer
8.3.6), at least two persons shall be present when tenders are
opened. One of the persons present should be a Council Officer
listed in 8.3.6(2) unless otherwise delegated. Where a Council
Officer is not present at the time tenders are opened, a Council
Officer must sight the original tender responses and the details of the
two persons present at opening
A tender received after the nominated closing time will be deemed late and
shall be endorsed with the exact time of receipt. A person presenting a
tender "over the Counter" will be asked to initial the endorsement and
advised that their late tender will not be admitted.
The tender box must be checked the day after closing for any late
submission(s).
(1) A late tender is to be opened and endorsed with the time and the
circumstances of receipt. The envelope enclosing a late tender is to
be attached to the tender
(2) A late tender submitted through official Australia Post Services of pre
paid cost, facsimile or email will not be admitted unless it can be
clearly established to the satisfaction of the responsible Director that
it was posted or transmitted before the date and time of close of
tender and in the ordinary course of post or transmission would have
been received in time. No other form of transmission will be
considered for tenders received after the date and time of close of
tender
(2) A tender who does not comply with the tender specifications is liable
to be rejected. The tenderer may be given reasonable opportunity to
comply with the tender specifications but may not alter the submitted
tender price. Where a tenderer claims an error has been made in
calculating the tender or has omitted to include a provisional sum, the
tenderer shall not be permitted to amend the tender price. In such
situations, the tenderer has the options of adhering to or withdrawing
the tender price or being passed over
(4) There are occasions where negotiation of a tendered price may have
to be considered before a tender is accepted. For example, where
significant errors and/or omissions in Council tender specifications
that have affected the prices tendered or where the tender prices
received are above the prices anticipated and the Principal has
insufficient funds to cover them
(7) Where it is intended that the lowest tender will not necessarily be
accepted then such information should be provided to all prospective
tenderers. Any tender may be rejected provided Council acts honestly
and with probity in so doing
(9) Where the value of the tender exceeds the delegated purchasing
authorities provided in 8.2.6, a report on the tenders received shall be
submitted to Council through the appropriate Committee.
(10) Council may choose to not accept any tender and this is to be stated
in tender documents
8.3.10 Re-tendering
(3) Where a tender has been let and additional works of a similar nature
are required in the same financial year, the Department Manager may
utilise the same contractor, without the need to recall tenders,
provided the unit rate has a variance of no greater than +5% and the
project remains within the budgeted allocation
8.3.11 The Chief Executive Officer (or delegate) must maintain an up to date
tender register at all times.
8.4 Confidentiality
8.5.1 Council will provide services to the community in the most effective manner
possible using a balanced mix of contractors and Council employed labour,
whichever is appropriate. Council will take into account the need for
specialist short term skills and equipment needs and balanced against the
need to maintain a strong Council employed skills base. This will enable
the provision of a range of services and the provision of good community
governance, and in accordance with industrial relations requirements.
8.5.2 Council will periodically review its Purchasing, Quotations and Tenders
Policy to ensure that the services provided are delivered in the most
efficient, effective and economical manner measured against comparable
services being delivered by comparable organisations.
(4) Sick, annual, long service and other leave available and taken
9.1.2 Salaries and wages will be paid on the basis of hours of attendance
recorded on an approved time sheet, except for employees on “no fixed
hours” contracts.
9.1.3 Time sheets will be submitted fortnightly by the employee to the Payroll
Officer and a copy to their immediate supervisor for authorisation (unless
agreed otherwise).
9.1.4 All claims for overtime must be authorised by the relevant manager on an
Overtime/Call Out Application Form for ASU staff or either a Callout or
Overtime Timesheet for AWU staff, prior to payment being processed.
9.1.5 Hours of work, flexi time etc. will be paid in accordance with City of
Prospect’s Enterprise Agreements.
9.1.6 All annual leave and long service leave must be applied for in writing by
employees and authorised by their supervisor prior to commencement of
leave.
9.1.7 All sick leave must be authorised by the relevant supervisor as soon as
practical after the period of absence, and will be paid in accordance with
City of Prospect’s Enterprise Agreements and the relevant award.
9.1.8 Additional hours resulting in the accrual of flexi time or payment of overtime
must be approved by the relevant Manager/Director prior to undertaking the
additional hours.
9.1.9 A responsible officer shall certify the pay sheets for payments of salaries
and wages for each period in the following manner:
(a) The persons named on these pay sheets were actually and
bona fide employed for the period shown.
9.1.11 Council may make payments of cash advances against salaries or wages
earned but unpaid. No advance shall exceed the amount of salary or wage
earned in the next pay period and the advance shall be reimbursed on the
next date on which salaries and wages are paid. Any such payment is to
be approved by the Chief Executive Officer in writing to the Payroll Officer.
“An asset is a resource controlled by the entity as a result of past events and from
which future economic benefits are expected to flow to the entity.”
Where the future economic benefits are expected to occur over a period spanning
more than one financial year, the asset is recognised as a “non-current” asset in
Council’s balance sheet.
10.1.1 Future economic benefits – in the case of public sector entities, future
economic benefits (or service potential) are the goods and services to be
provided by the asset, whether or not the entity receives a net cash inflow
for their provision.
10.1.2 Control by the entity - control means the ability of the entity to benefit from
the future economic benefits and/or to restrict the access of others to those
benefits.
10.2.1 Assets are initially recognised at cost. Cost is determined as the fair value
of the assets given as consideration plus costs incidental to the acquisition,
including architects' fees and engineering design fees and all other costs
incurred. For assets acquired at no cost or for nominal consideration, cost
is determined as fair value at the date of acquisition. The cost of non-
current assets constructed by Council includes the cost of all materials
used in construction, direct labour on the project and an appropriate
proportion of variable and fixed overhead.
10.2.2 Capital works still in progress at balance date are recognised as other non-
current assets (under Works In Progress) and transferred to the
infrastructure, property, plant & equipment register when completed ready
for use.
10.2.3 As at 1 July 2008, Council elected not to recognise any values for land
under roads acquired before the commencement of AASB 1051 Land
Under Roads.
10.3.1 Certain asset classes are re-valued on a regular basis such that the
carrying values are not materially different from fair value. For
infrastructure and other asset classes where no active market exists, fair
value is determined to be the current replacement cost of an asset less,
where applicable, accumulated depreciation calculated on the basis of such
cost to reflect the already consumed or expired future economic benefits of
the asset.
10.3.2 In line with AASB13, where an active market for sale does exist, the highest
and best use valuation will be used. Individual asset assessment of an
active market will be undertaken at each revaluation point.
10.3.3 Non-current assets, other than receivables and investments, are re-valued
at least once in every five years in accordance with the Local Government
(Financial Management) Regulations 1999. However, if at any time
management considers that the carrying amount of an asset materially
differs from its fair value then the asset will be re-valued regardless of when
the last valuation took place. Non-Current physical assets that are acquired
between revaluations are held at cost until the next valuation, where they
are re-valued to depreciated replacement cost. Desktop revaluation, using
revised unit rates, are conducted annually for Infrastructure assets.
(2) The asset possesses a cost that can be measured reliably, and its
value, at the time of Council gaining control over the asset, is in
excess of $1,000
10.4.2 Acquisition costs of assets which total less than $1,000 will be treated as
operating expenses.
10.4.3 Assets should have a useful life of greater than one year in order for the
expenditure to be capitalised.
10.5.2 Council uses straight line depreciation for all its non-current assets on the
basis that the economic benefits, being the service provided by the asset,
are generally used in a uniform manner throughout the assets useful life.
10.5.3 The straight line depreciation method differs from the concept of condition
based depreciation which, in the above example, does not reflect the
pattern of consumption of the future economic benefits but rather measures
the degradation curve of the underlying asset providing those economic
benefits. The use of condition based depreciation may only be considered if
the method complies with the provisions of UIG Interpretation 1030 –
Depreciation of Long-Lived Physical Assets: Condition Based Depreciation
and Related Methods.
10.5.4 In accordance with AASB 116 – Property, Plant & Equipment, depreciation
of an asset will begin from the time the asset is available and ready for use.
This includes the assets being in its intended location and in a condition to
enable the assets to be used in the manner they were intended. In the
case of contributed assets, depreciation will begin from the time of
handover to Council of those assets.
10.5.5 Other than land, all infrastructure, property, plant and equipment assets
recognised are systematically depreciated over the useful life in a manner
which reflects the consumption of the service potential embodied in the
asset.
10.5.6 Depreciation is recognised on a straight-line basis over the useful life of the
asset. Useful life is the period over which an asset is expected to be
available for use by the entity. Useful Life periods for each class of asset
are shown on page 34.
Infrastructure
Footpaths 15 – 50 years
Bitumen 15 – 30 years
Paved 50 years
10.5.7 The useful life of each infrastructure asset has been estimated based on
the best information available to Council, but appropriate records covering
the entire life cycle of these assets are not available, and extreme care
should be used in interpreting financial information based on these
estimates. Depreciation of infrastructure assets commences the year
following initial capitalisation.
10.6.2 Residual values will be reviewed annually and adjusted if appropriate given
the most up to date information.
10.6 Impairment
10.6.3 AASB136.9 requires that all infrastructure and property, plant & equipment
are review annually for impairment.
10.6.4 Assets that have an indefinite useful life are not subject to depreciation and
are reviewed annually for impairment. Assets that are subject to
depreciation are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset’s
carrying amount exceeds its recoverable amount (which is the higher of the
present value of future cash outflows expected to be derived from an asset
or value in use).
10.6.5 For assets whose future economic benefits are not dependent on the ability
to generate cash flows, and where the future economic benefits would be
replaced if Council were deprived thereof, the value in use is the
depreciated replacement cost. In assessing impairment for these assets, a
rebuttable assumption is made that the current replacement cost exceeds
the original cost of acquisition.
10.7 Disposal
10.7.2 When an asset is sold and its selling price varies from the carrying amount
in Council’s balance sheet, a gain or loss on disposal will be recognised
directly to the Income Statement in accordance with AASB 116 – Property,
Plant & Equipment.
10.7.3 If an asset is disposed before it has been fully depreciated, the carrying
amount represents a loss on disposal and will be expensed.
10.7.4 Where an asset disposed of has been subject to revaluation, the net
increment in the asset revaluation reserve relating to the disposed asset
will be transferred to Accumulated Surplus. The amount transferred must
not exceed the balance of the asset revaluation.
10.7.6 Maintenance costs are deemed to include day to day expenditure incurred
in relation to the use of an asset. Maintenance costs are operating
expenses which act to retain or restore the utility of an asset.
Maintenance Capital
Fleet & Plant Assets Expenditure <$1,000 for Expenditure >=$1,000 for
individual assets or assets individual assets, or assets
that cannot be easily that can be easily grouped.
grouped.
Sealed Roads Patching that is intended to Any treatment to a road that
keep the asset in service but extends the life of the asset.
does not expend the life of All new road construction.
the asset.
Line marking.
Road cleaning & sweeping.
IT & Office Equipment / Expenditure <$1,000 for Expenditure >=$1,000 for
Furniture individual hardware/ individual
furniture assets or assets hardware/furniture assets,
that cannot be easily or assets that can be easily
grouped. grouped.
Annual software licence and Costs associated with the
maintenance fees and all purchase or major upgrades
minor upgrades to core of core operating systems.
operating systems.
Drainage & Pits All repairs that are intended Repairs that extend the life
to keep the asset in service of the asset of the drainage
but does not extend the life segment being repaired.
of the asset. All new drainage
construction.
Kerb & Gutters All repairs that are intended Repairs that extend the life
to keep the asset in service of the asset.
but does not extend the life All new kerb construction.
of the asset.
General kerb maintenance.
Signs Repairs to existing signs & All new signs and/or posts.
posts. Complete replacement of
existing signs & posts.
Footpaths All repairs that are intended Repairs that extend the life
to keep the asset in service of the asset.
but does not extend the life All new footpath
of the asset. construction.
Research & Design Costs All costs associated with the All design costs incurred
appraisal and investigation after a formal decision from
preceding a formal Council Council to proceed with the
decision to proceed with the project. Subject to the tests
project. of AASB 136 Impairment of
All feasibility studies. assets.
Maintenance Capital
Irrigation Maintenance to existing All new irrigation
irrigation equipment. equipment.
Repairs/replacement that Repairs/replacement of
are intended to keep the irrigation equipment that
asset in service but does not extend the life of the asset.
extend the life of the asset.
Maintenance Capital
Design and Documentation High level concept. Asset specific ,i.e. relates to
Not asset specific, i.e. not construction specifications.
relating to construction
specifications.
CLASSIFYING OPERATING/CAPITAL
Assessment
No
OPERATING EXPENDITURE
No
No
No
No
No Yes
No Yes
10.9.1 Capital expenditure for the renewal and replacement of assets must be
separately distinguished from capital expenditures for new and upgraded
assets.
10.10.1 Certain assets are made up of collections of many individual items, each of
which is individually below any reasonable capitalisation threshold.
Examples include, road signs, library books and garbage bins.
10.10.2 If the total number of items in the collection is static, the initial collection is
capitalised. When individual components are replaced, the costs of the
replacement are written off an an expense. Examples of such Council
collections are road signs.
10.10.3 If the total number of items in the collection changes over time, additional
items purchased during the year are capitalised and all items in the
collection are depreciated based on the average anticipated useful life.
Examples of such Council collections are library books and waste bins.
10.11.3 A register of items which are valuable and portable will be maintained for
the purpose of controlling and safeguarding items which by their nature are
at risk of loss. A stock take of such items shall be conducted at least
annually. Valuable portable items which are more likely to be subject to
loss due to theft or misplacement shall include items such as cameras,
portable TV’s, videos and communication equipment.
10.12.1 A record of hall and property hire under the care, control and management
of Council will be maintained giving particulars of each hiring and the
amount paid as a refundable security deposit and hire fee.
(1) The sale or disposal of Council land will be the subject of a separate
resolution of Council in every instance.
(2) The process for the sale and disposal of land and other assets will be
fair and transparent to ensure Council obtains the best outcome and
price.
(b) Quotations for the sale of the land from not less than three (3)
Prospect based land agents. However, quotations from
specialist agents should be sought if commercial land is
involved.
(c) Sale by public auction. (In the event that the public auction fails,
the Chief Executive Officer has delegated authority to dispose
of the land at the best available price, provided an independent
valuation is sought).
(1) The method of sale will be decided by the Chief Executive Officer or
their delegate.
(1) Council must have regard to the following principles in its disposal of
Land and Assets:
1) Land disposal
20 Registers
20.1 Introduction
20.2 Insurance
20.2.1 Identified insurable risks will be covered with a policy of insurance issued
by Local Government Risk Services. The cover will be equivalent of full
replacement cost.
20.2.2 The extent of cover, both risk and sum insured, shall be reviewed at least
annually.
(9) Householders
(13) Travel
21 Computing/Electronic Accounting
21.1 Civica ‘Authority’ Corporate Database
21.1.1 Council uses Civica’s “Authority” accounting and payroll software running
on a Linux Server platform.
21.2 Security
21.2.1 Security of the general and subsidiary ledgers is implemented at both the
hardware and software levels. Initial access to the system is restricted by
individual user ID code and password validation. Access to the database is
restricted by system access routines.
21.2.3 The relevant securities for specific modules are set for employees working
in the specific accounting areas of creditors, debtors, payroll, general
ledger, receipting and rate accounting. Employees in the above areas have
full access to the respective module’s programs and can perform enquiry,
reporting, data entry, processing and maintenance of financial records.
21.2.4 Employees outside these specific financial and rating areas are restricted
to enquiry and reporting access only.
21.3.1 System integrity is maintained through the use of audit logs which track all
changes to data in specific modules. In addition a comprehensive system
of data backups and system redundancy mean that recovery from either a
system failure or potential disaster situation can always be performed.
21.4.1 The entire Authority database is fully backed up overnight. The system is
backed up nightly and weekly (both to disk and tape), and the back up
tapes are stored off site, in a fireproof data safe. Weekly backups are sent
to Recall Data Protection to be stored in their off site data vaulting facility.
22 Financial Records
22.1 Fraud Prevention
22.1.2 Council has both a Whistleblowers Protection Policy and an Anti-Fraud and
Anti-Corruption Policy that aim to achieve fraud prevention.
22.2.1 A Long Term Financial Plan will be developed as part of Council’s strategic
management planning processes. The plan will provide a long term
financial projection for a period of no less than 10 years and will be
reviewed at least annually.
22.2.2 The Long Term Financial Plan will align with Council’s Strategic Planand
should form the basis for the annual budget each year.
22.2.3 Assumptions used in developing the plan will be reviewed yearly and
updated in conjunction with Council’s annual budget development process.
22.2.4 The assumptions used in developing the plan should address at a minimum
Council’s position on debt levels, the management of the community’s
infrastructure assets, rate revenue increases and specific operational
expenditure strategies.
22.3.3 Audited financial statements will be submitted to the relevant Minister and
to other bodies as prescribed in the Regulations before 30th November
each year.
1. Basis of Preparation
3. Revenue Recognition
over the assets comprising the revenue, or when the amount due
constitutes an enforceable debt, whichever first occurs.
Receivables for rates and annual charges are secured over the
subject land, and bear interest at rates determined in accordance with
the Local Government Act, 1999 (as amended). Other receivables
are generally unsecured and do not bear interest.
Transitional Provisions
Council elected not to recognise land under roads in accordance with
the deferral arrangements available under AASB 1045 which expired
30 June 2008. As at 1 July 2008, Council has elected not to
recognise any values for land under roads acquired before the
commencement of AASB 1051 Land Under Roads.
Initial Recognition
All assets are initially recognised at cost. Cost is determined as the
fair value of the assets given as consideration plus costs incidental to
the acquisition, including architects' fees and engineering design fees
and all other costs incurred. For assets acquired at no cost or for
nominal consideration, cost is determined as fair value at the date of
acquisition. The cost of non-current assets constructed by Council
includes the cost of all materials used in construction, direct labour on
the project and an appropriate proportion of variable and fixed
overhead.
Materiality
Assets with an economic life in excess of one year are only
capitalised where the cost of acquisition exceeds the materiality
threshold of $1,000 as established by Council. No capitalisation
threshold is applied to the acquisition of land or interests in land.
Subsequent Recognition
Certain asset classes are re-valued on a regular basis such that the
carrying values are not materially different from fair value. For
infrastructure and other asset classes where no active market exists,
fair value is determined to be the current replacement cost of an
asset less, where applicable, accumulated depreciation calculated on
the basis of such cost to reflect the already consumed or expired
future economic benefits of the asset.
Infrastructure
Footpaths 15 – 50 years
Bitumen 15 – 30 years
Paved 50 years
Impairment
Assets that have an indefinite useful life are not subject to depreciation
and are reviewed annually for impairment. Assets that are subject to
depreciation are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset’s
carrying amount exceeds its recoverable amount (which is the higher of
the present value of future cash outflows or value in use).
For assets whose future economic benefits are not dependent on the
ability to generate cash flows, and where the future economic benefits
would be replaced if Council were deprived thereof, the value in use is the
depreciated replacement cost. In assessing impairment for these assets,
a rebuttable assumption is made that the current replacement cost
exceeds the original cost of acquisition.
6. Payables
7. Borrowings
8. Employee Benefits
Superannuation
Council makes employer superannuation contributions in respect of
its employees to the Local Government Superannuation Scheme.
The Scheme has two types of membership, each of which is funded
differently.
9. Construction Contracts
11. Leases
22.4.1 The principal accounting officer (Manager Financial Services), will prepare
draft statements for submission to the Audit Committee, and for external
audit.
22.4.2 The Audit Committee will review the draft statements to ensure that they
present fairly, the affairs of Council. This review will be conducted
independent of the external audit. However, it is anticipated that the Audit
Committee will have the benefit of any information available (informal or
otherwise) on particular matters raised by the auditor up until the time of the
review. Any suggested changes will be provided to the principal accounting
officer.
22.4.3 Following the external audit, the principal accounting officer and auditor will
propose any necessary amendments to the draft statements, which will be
referred to the certifying officers for consideration.
22.4.4 The certifying officers will review the proposed amendments to the draft
statements and will either refer them to the Audit Committee for further
consideration or may, if satisfied that the proposed amendments are
appropriate, complete and date the certificate. The certificate of the final
statements will be signed by the Mayor and the Chief Executive Officer.
22.4.5 The date of the certificate will be the date of authorisation for issue of the
annual financial statements for the purpose of AASB 110 Events after
Balance Sheet Date.
Significant changes to be
resubmitted to Audit Auditor to make final adjustments
Committee
(2) interest rate and other risks (e.g. liquidity and investment credit risks)
are acknowledged and responsibly managed;
(3) net interest costs associated with borrowing and investing are
reasonably likely to be minimised on average over the longer term
(1) maintain target ranges for Net Financial Liabilities and Interest Cover
ratios
(2) not retain and quarantine money for particular future purposes unless
required by legislation or agreement with other parties
(3) borrow funds in accordance with the requirements of the Long Term
Financial Plan and accordance with Section 134, Local Government
Act, 1999
(4) apply any funds that are not immediately required to meet approved
expenditure (including funds that are required to be expended for
specific purposes but are not required to be kept in separate bank
Council funds that are not immediately required for operational needs and
cannot be applied to either reduce existing borrowings or avoid the raising
of new borrowings will be invested.
The balance of funds held in any operating bank account that does not
provide investment returns at least consistent with ‘at call’ market rates
shall be kept at a level that is no greater than is required to meet immediate
working capital requirements.
Council funds available for investment will be lodged ‘at call’ or, having
regard to differences in interest rates for fixed term investments of varying
maturity dates, may be invested for a fixed term.
In the case of fixed term investments the term should not exceed a point in
time where the funds otherwise could be applied to cost-effectively either
defer the need to raise a new borrowing or reduce the level of Council’s
variable interest rate borrowing facility.
When investing funds, Council will select the investment type which
delivers the best value, having regard to investment returns, transaction
costs and other relevant and objectively quantifiable factors.
Council management may from time to time invest surplus funds with the
Local Government Finance Authority.
23.3.4 Reporting
(2) the proportion of fixed interest rate and variable interest rate
borrowings at the end date of the reporting period and an estimate of
the average of these proportions across this period
24 Review
24.1 The Manual will be reviewed in line with Council’s Policy Framework or earlier in the
event of major changes to legislation or related policies/procedures or if deemed
necessary by the Chief Executive Officer or Relevant Director.
26 Further Information
26.1 For further information about the Accounting Policies and Procedures Manual please
contact:
Director Corporate Services
City of Prospect
128 Prospect Road
Prospect SA 5082