Getting ready for Financial Year End can be stressful, with many competing priorities for your time. Here are 5 tips to help you keep on track.

Legislative Requirements

It’s worth taking a minute to consider what’s involved when we talk about End of Year from an Asset Management / Financial point of view.

Local Councils must meet many legislative requirements including Australian, and State legislation, and State regulations:

Local Government Act

Sets out role, purpose, responsibilities, and powers of local governments including the preparation of a long term financial plan supported by asset management plans for sustainable service delivery.

Local Government Act-Annual Reporting Section 428(2)(d)

(d) A report of the condition of the public works, under the control of Council as at the end of that year together with:

(i) An estimate (at current values) of the amount of money required to bring the works up to a satisfactory standard: and

(iii) Council’s programme for maintenance for that year in respect of the works.

Australian Accounting Standards

Set out the financial reporting standards relating to, inter alia, the (re)valuation and depreciation of infrastructure assets.

Local Government (Financial Management and Rating) Amendment Act 2005

Impetus for the development of a Strategic Management Plan, comprising an (Infrastructure) Asset Management Plan and Long Term Financial Plan.

The ISO 55000 series comprises three standards:

ISO 55000 provides an overview, principles, and terminology - standard terms and definitions.

ISO 55001 is the requirements specification for an integrated, effective management system for asset management.

ISO 55002 provides guidance for the implementation of such a management system.

We’re governed by these (and other) Acts and Standards to ensure we manage our Assets effectively and efficiently and that we can report in an open and transparent way about how we did it. This is a good thing for us as it’s much easier to manage our assets when we have the relevant information at our fingertips and easily accessible.

So, here are my 5 tips:

1. Preparation

Preparation is key. Preparing for Year End should commence at the end of the previous years Year End! It’s an on-going cycle and the year before will have its impact on the year ahead.

2. Capital Projects information from the Asset Management System

All councils will have their own processes in place to plan capital renewal and replacement projects to meet their levels of service objectives. It will make life a lot easier if the data influencing the capital works programs came from the up-to-date, verified, and validated information extracted from the Asset Management system. The AMS should be the one point of truth and the single source of all asset information.

There are modelling tools available to help Asset Managers assess different budget scenarios to ensure that the best budgeting option is identified to maintain the asset network at the accepted level of service. Modelling different scenarios allows us to evaluate what is likely to happen over time (usually 20 years) to the network assets if we spend a certain amount of money each year on renewal and replacement. This is a good exercise to do as not only will it provide Council with good information, such as the overall condition of the network, but also it provides us with the budget Council requires to continue to maintain the network at the agreed Levels of Service, and, if you run a model with less budget than required, you should be able to see how much this action is likely to cost you over the upcoming years – as leaving an asset to deteriorate past it’s optimal intervention point usually ends up costing more to fix. The analysis is also a basis for stakeholder engagement, with good information, stakeholders will be able to make the correct decisions.

3. Intervention Points

Ensure the appropriate Intervention Points have been set up in the Asset Management system to reflect the renewal and replacement practices happening on the ground. Setting the correct intervention points will ensure Council can carry out prescribed work at the optimal point in the asset’s lifecycle. This practice guarantees the asset is not left to deteriorate to a point that would require more work and more money to bring the asset up to a serviceable level. Intervention points could be set up in the Asset Management system at Condition 6 (on a 0 to 10 Condition rating), or Condition 3 (on a 1 to 5 condition rating) to reflect Council’s actual renewal and replacement strategies. The Asset Management system should calculate the depreciation based on the intervention point, to avoid any write-offs in the Finance System.

4. Easy Data Capture

The asset data is managed and maintained in the Asset Management system and it is important to record capital works in the system to ensure the data is kept up-to-date and relevant. Capturing information required to update the assets in the Asset Management system is a job that often falls to the Project Manager as part of the ‘Close Out’ process. This part of the project can be particularly difficult for the project managers as they are required to provide detailed information including dimensions, materials, location, etc. sometimes months after the job was finished. At the project planning and scoping stage, data will have been collected, analysed, and checked to ensure the work is warranted, to ensure the best contractor for the job is engaged, to ensure appropriate materials are used, and other factors such as Work Health and Safety regulations are adhered to, etc. This information is being captured and utilised at the project planning stage, therefore it would be more efficient to capture the information for the capital works updates at this stage also, and amend accordingly as the project progresses to completion.

5. Reporting

As well as producing the usual high-level End of Year Financial reports, extract detailed information at Asset level and save in Excel format. I have found this detailed ‘snap-shot’ of the assets has, on occasion, been invaluable to me as a way of identifying changes in the data from year end to year end. Being able to provide the auditor with a valid reason why this year's opening costs are not matching last year's closing costs can be quite satisfying - but without this in-depth data to work with, it could just as easily be a headache.

Hope some of this has been helpful. Good luck with your Year End!

Please feel free to contact me if you’re needing help with your Capital Works updates and EOY Financials E: iamdata@internode.on.net T: 0423 240 439