Property, plant and equipment - disposal principles

Overview of the disposal process

The Australian National University Act (1991) section 45 requires that '... the Council must do all things necessary to ensure that adequate control is maintained over the assets owned by, or in custody of, the University'. The accurate and timely removal of retired assets from the Property Registers and the ESP Assets Management System (ESP) is an integral step in maintaining this control.

This section provides guidance on the procedures to be adopted when disposing of an asset in ESP. It is recommended that these processes also are following relatively in respect of disposals of property.

Responsibility for the use, maintenance and custody of plant and equipment resides with the Heads of budget units. To assist in the discharge of this responsibility, reliable management information regarding the assets in use by their budget unit is required.

The accurate and timely accounting for disposal of assets in ESP facilitates the provision of relevant information for both informed decision making and reporting purposes. To dispose of an asset, budget units are responsible for:

  • completing the Asset Disposal Form ;
  • obtaining approval for disposal of the asset;
  • the actual disposal of the asset;
  • processing the system removal of the asset via the Asset Retirements Panel Group in ESP; and
  • forwarding the completed Asset Disposal Form and supporting documentation to Statutory and Management Reporting, Finance and Business Services, Chancelry 10C.

Finance and Business Services is responsible for:

  • reviewing the disposal process;
  • confirming the removal of the asset from ESP;
  • ensuring the integrity between the General Ledger and ESP;
  • providing advice and assistance on related assets matters.

Preparing the asset disposal form

The University removes assets from the registers when they are obsolete, unserviceable, traded-in, sold, missing or disposed of by other means. The

  • the asset details (i.e. item number, description, account, historical cost etc);
  • the intended method of retirement (i.e. trade-in, auction, tender etc);
  • any offers to purchase, quotations for trade-in or confirmation of acceptance;
  • evidence of action to be taken on retirement of obsolete assets (i.e. why the item is obsolete, how and when the items are to be physically removed); and
  • evidence of action taken to recover missing/stolen assets (e.g. police report number).

Consideration must be given to whether the asset being retired can be utilised by other areas of the University.

Prior approval must be obtained before retiring any ANU asset. This entails obtaining the authorisation of the relevant delegated officer and if required, co-authorisation from other delegated officers such as the Vice-Chancellor/President. The accumulated historical cost of the item to be retired will dictate the level of authority required to proceed with the retirement process.

Who can approve the retirement of ANU assets?

Authority for the retirement of assets by the University is delegated to certain positions in accordance with the Delegations of Authority, which is approved by Council.

Heads of budget units such as Deans, Heads of Research Schools etc have the authority to:

  • declare equipment to be no longer serviceable or saleable;
  • declare lost or deficient equipment to be irrecoverable;
  • declare equipment to have a reduced value; and
  • authorise the sale, by auction, trade-in, private treaty or otherwise of equipment no longer required by ANU.

This authority only applies where the historical cost of the equipment is equal to, or less than $50,000. This authority cannot be transferred to another agent and can therefore only be exercised by that delegate. The authority is not restricted to items of equipment on ESP, but applies to all inventories, stores or equipment held by ANU.

The prior approval of the Deputy Vice-Chancellor/Vice President is required for retiring assets with accumulated historical cost greater than $50,000 and the Vice Chancellor where the accumulated historical cost is greater than $100,000.

Where an asset has been traded-in for another asset, the trade-in and purchase with the supplier represents two separate and distinct transactions. Both of these are subject to the relevant financial delegations.

A sale by tender exists where the University attempts to attract the best possible price, from either a selected group of purchasers (e.g. select industry group) or the community at large, for an item of equipment. A general requirement of a valid sale by public tender is the notification or advertisement of the intention to sell the surplus asset/s. This method is considered a fair option for the sale and retirement of assets as it eliminates the opportunity of bias, whilst maximising the return on sale.

A Private Treaty arrangement exists where the offer to sell the asset is made to only one party at arms length. Sale by private treaty may be arranged where:

  1. there is only one apparent purchaser;
  2. the cost of sale by other means would exceed the likely realisable value of the item; or
  3. the sale to an educational or charitable institution is contemplated.

In considering approval for Private Treaty arrangements business offices are required to assess the sale in terms of the following:

  1. Is the asset surplus to ANU requirements?
  2. Could the University benefit more by going to tender?
  3. Is the value being offered a 'fair' value for the particular asset?
  4. Would the 'normal' sale result in the likely realisable value being lower than the private treaty purchase offer?

Actual retirement of the asset

The completed authorised form provides the written authority for actual retirement of a University asset.

Any proceeds received as a result of the retirement (i.e. trade-in value or sale price) must be recorded in the relevant retirement account. The accounts used are 9370M (for the sale of all assets except for motor vehicles) and 9370V (for the sale of all motor vehicles). The proceeds must be recorded in the ledgerprior to performing the system removal of the asset.

The ESP item number of the item being retired should be included in the ledger description of the proceeds transaction.

When a new asset is purchased and a trade-in is involved, the newly acquired asset must be recorded at the full gross cost and the trade-in recorded as proceeds for the sale of the disposed asset.

The gross value of the asset purchased should be charged to the appropriate asset account with a non-payable adjustment processed to the relevant retirement account (9370M or V).

It is the business officer's responsibility to ensure that all information has been entered onto the form, all documentation has been attached and that all valid authorisation has been sought (prior to disposal). The business office is required to ensure that the process has been correctly executed within ESP (or can request F&BS to assist with this process.) To assist in this review, a checklist is provided on the reverse side of the Asset Disposal Form. The preparer is required to sign and date the form on page 2 providing an assurance that all of the above has been completed before forwarding to SMR, Finance and Business Services.

When the completed form is received by Finance and Business Services it is reviewed for completeness and confirmation of the disposal within ESP.