FIXED ASSETS POLICY
AUTHOR: Frank G Fredericks
REVIEWED BY: MPSC board of directors
VERSION: 1
DISCLAIMER:
This document was prepared by the author and copyrights are reserved. It is the duty of the employee to familiarize himself / herself with all relevant policies and procedures. Non-compliance to this policy will lead to corrective measures being initiated.
TABLE OF CONTENTS
CONTENTSPAGE
- Introduction and Scope2
- Policy Objectives2
- Relevant forms and Documents2
- General Principles2
- Allocation on Fixed Assets3
- Asset Register4
- Location and Transfer of Fixed Assets5
- Bar Coding of Fixed Assets5
- Assets Counts6
- Maintenance of Fixed Assets6
- Additions of Fixed Assets7
- Disposal of Fixed Assets7
- Depreciation of Fixed Assets8
- Capitalisation of Fixed Assets8
- Capital Expenditure8
- Pool Assets9
- Removal of Assets9
- Personal Liability & Clearance upon Resignation10
- Insurance on Fixed Assets10
- Loss Control11
- INTRODUCTION AND SCOPE
This document has been compiled for the use of MPSC directors and employees and outlines the appropriate policies related to the Assets of MPSC.
- POLICY OBJECTIVES
To ensure the following:
2.1Allocation of all Fixed Assets (movables & immovable) is properly authorised and that they are valid
2.2Effective recording of all additions, disposals and transfers of Fixed Assets in the fixed assets register
2.3Fixed Assets are appropriately depreciated
- RELEVANT FORMS AND DOCUMENTS
3.1Asset register
3.2Asset movement form
3.3Loss control form
3.4Asset disposal control form
3.5Exit checklist
4.GENERAL PRINCIPLES
4.1The Accounting Officer shall maintain a central asset register for fixed assets and inventories and shall be responsible for the management and inventory control of such assets.
4.2The asset register, referred to in subparagraph (1) shall provide for:
(a) The unique asset number marked on the individual assets; and
(b) The location of such assets.
4.3Assets held under a finance lease agreement, shall also be included in the asset register but must be clearly categorised as being finance lease assets, provided that, on expiry of the lease, the assets must be re-classified in the same manner as other assets.
4.4The ACCOUNTING OFFICER shall, with the approval of the board, implement a revaluation policy for the external valuation of land and buildings every five years at open market value.
4.5Assets shall be reflected and disclosed in the Company’s balance sheet at historical cost less accumulated depreciation
4.6The ACCOUNTING OFFICER and Office Administrator shall implement formal procedures for the reconciliation, checking and updating at regular intervals of the asset register with the general ledger as well as with certificates of assets.
4.7The Office Administrator shall arrange for a physical fixed asset count to be performed every financial year and shall compare the outcome thereof, with the fixed assets register.
4.8A physical stocktaking of all the movable assets of the Companyshall be carried out annually and compared with the asset register and inventories.
4.9Unserviceable, redundant or obsolete items that have been written off by the board shall be disposed of in terms of an informal tender procedure or other method approved by board.
5.ALLOCATION ON FIXED ASSETS
5.1Employees are responsible for safekeeping of the Fixed Assets allocated to them
5.2The employee must receive a copy of the asset list, which contains a summary of all the Fixed Assets allocated to him/her
5.3No employee may use assets of MPSC for a personal purpose unless being authorised to do so by the most senior delegated director of MPSC
5.4No equipment shall be transferred between offices without the approval of the chairperson
5.5The removal of equipment from MPSC premises shall only be allowed with the approval of the duly delegated director through asset movement form signed by the duly delegated director
5.6A copy must be kept by the relevant person assigned to the fixed asset register as evidence that the asset has been removed. On the return date of the asset the signed asset from must be submitted to the duly delegated director and he/her must ensure that the asset has been returned
5.7The Internal Audit shall at regular intervals physically verify assets
6.ASSET REGISTER
6.1A Fixed Asset Register must be maintained at all times.
6.2This Register must be updated regularly and should reflect a complete and accurate list of fixed assets.
6.3For all capital items acquired the values must be included in the Fixed Asset Register.
6.4Ad hoc audits will be conducted from time to time by an ermployee appointed by the chairperson.
6.5The Fixed Asset Register must at least contain the following information:
(i) Asset Category
(ii) Account allocation
(iii) Description of the Asset, including serial numbers if available
(iv)Asset Number
(v) Date of acquisition
(vi)Cost price - excluding VAT, except in the case of motor vehicles.
(vii) Depreciation period, rate and method
(viii) Depreciation amount for current year
(ix) Accumulated depreciation: Opening & Closing balance
(x) Totals per category showing Cost, Accumulated Depreciation and Net book value of the assets that cross-reference to the general ledger.
(xi) Physical location
(xii) Date of last count
(xiii) Date and proceeds of disposals
(xiv) Profit or loss made on disposal
7.LOCATION AND TRANSFER OF FIXED ASSETS
7.1If an employee deems it necessary to transfer Fixed Assets, from one location to another the employee must fill in an asset movement control form authorised by the Office Administrator
7.2If an asset is temporarily transferred from one location to another, an asset movement form must be filled and be authorised by the duly delegated director, and the form must be resubmitted when the asset is returned
8.BARCODING OF FIXED ASSETS
8.1The duly delegated director must ensure that all fixed assets are bar coded with the unique bar code number allocated to them according to the asset register
9.ASSETS COUNTS
9.1The physical inventory of all capital/fixed assets shall be conducted at least twice a year and the register must agree to the physical assets on hand.
9.2It is a requirement that all assets are properly marked and numbered to facilitate the physical control over the assets. This will be done by an acceptable method of marking.
10.MAINTANANCE OF FIXED ASSETS
10.1No purchase would be made if there is an asset of the same nature and function available which only needs repairs i.e. an asset will only be bought if there is no asset available which would, once repaired, make the addition unnecessary.
10.2The normal procurement procedures must be followed which include that quotes must be obtained before the work is carried out.
10.3Repairs and maintenance must be expensed in the period in which it is incurred.
10.4The additional costs are to be capitalised when:
(i) The addition increases the capacity or efficiency of the base asset;
(ii) The nature of the expense qualifies; and
(iii) The base asset has a remaining useful life of one year or more from the date the addition is put into service.
10.5All repairs and maintenance should be done putting the interest of the MPSC first and ensuring that the asset is repaired in a cost-effective manner, which would carry long-term value.
11.ADDITIONS TO FIXED ASSETS
11.1Employees who need new Fixed Assets must fill in an external requisition form and motivate the need for the new asset
11.2Additions must be made and approved in accordance with the procurement policy
11.3Delivery of Fixed Assets must be made directly to MPSC requiring the asset
11.4The employee receiving the Fixed Assets must sign on the delivery note as proof of receipt of the assets. The employee must also compare the quantity and price on the delivery note with the quantity and price on the order
11.5The employee must send the purchase requisition form and the delivery note to ensure that the movable asset received is the asset that was approved for purchase
11.6Where the acquisition of an immovable asset is included prior approval of the duly delegated director (as per Delegation of Company) is required.
12.DISPOSAL OF FIXED ASSETS
12.1Disposal of movable assets must be at market-related value, by tender or auction, whichever is at the sole discretion of the boardand what is most advantageous for the MPSC.
12.2Permission shall always first be obtained from the duly delegated director (as per Delegation of Company) for disposal, donation or alienation of movable and immovable assets or property of MPSC
12.3All disposable assets (movable and immovable) are disposed in the following order:
(i)To directors on a tender basis
(ii)To Staff
(iii)If any asset remains unsold then to be donated to needy institution that will be nominated by the board
(iii)If any asset remains unsold then by auction
12.4All disposable assets are to be disposed off at a market related value
12.5The delegated director in consultation with the board must approve this list for sale
12.6A copy of this approved list should also be sent to accounting officer so that the asset register is updated
12.7The asset register must be reviewed on a quarterly basis to ensure that the changes as per disposal list have been made on the asset register.
13.DEPRECIATIONOF FIXED ASSETS
13.1The ACCOUNTING OFFICER must ensure that assets are depreciated in accordance with the relevant accounting system
14.CAPITALISATION OF ASSETS:
14.1Assets will be capitalised by virtue of nature and written off in accordance with the depreciation policy.
14.2Purchases not capitalised by virtue of nature will be expensed in the period in which it was acquired and will only be included in the fixed asset register for control purposes.
15.CAPITAL EXPENDITURE / ACQUISITION OF FIXED ASSETS
15.1 All capital expenditure must be in terms of the Procurement Policy.
16.POOL ASSETS
16.1It is contemplated that MPSC will possess movable assets, such as cellular phones, laptop computers, digital diaries etc., some of which might be allocated to specific individuals for a certain period for use in their day to day activities.
16.2It is the responsibility of the Administration/Finance Department to record those assets in the register before they are issued to the respective employees.
16.3The information is required for control over the physical assets, including insurance requirements should any of these assets be stolen, damaged or lost.
16.4Persons who are using the assigned pool assets are required to take the necessary care in looking after these assets on behalf of MPSC.
17.REMOVAL OF ASSETS:
17.1 No person is allowed to remove any of the MPSC's assets from the premises without written permission from his/her superior - with the exception of assets allocated formally to an individual to be used in performing his normal duties on a semi-permanent basis.
17.2 The asset removed should be documented in a register, which will be the responsibility of the Administration/Finance Department, and the person removing the assets is responsible for signing out the asset.
17.3 If any asset needs to be removed for more than one month, special permission should be granted before removing the asset. This decision shall be taken by the delegated director.
17.4 All assets for which the MPSC is registered as titleholder will remain the property of the MPSC under all circumstances even whilst in possession of individuals.
17.5 No person has the right to dispose of any of the MPSC's assets whilst in his/her possession.
18.PERSONAL LIABILITY & CLEARANCE PROCEDURE UPON RESIGNATION
18.1Responsibility for loss/damage/insurance excess etc. shall rest with primary custodian (user).
18.2In cases where an asset was stolen, a declaration must immediately be made at the nearest Police Station and a case number must be obtained for insurance purposes.
18.3The person who signed for the removal of the asset will remain responsible for the safe custody and return of the assets and would be held personally liable in the event of non-return of the assets.
18.4Although MPSC might be insured against the loss of specific assets, the person removing or loosing the asset may be required to make good the total value of any asset lost or damaged, if MPSC at its sole discretion establishes that such damage has been occasioned through the negligence of the person concerned.
18.5Staff members and directors must adhere to the clearance procedure upon resignation from their duties or when their services.
19.INSURANCE ON FIXED ASSETS
19.1The Fixed Assets must be insured adequately against theft, damage or any other event that can negatively affect them.
20.LOSS CONTROL
20.1When an asset under control of the head of a section has been demolished, destroyed or damage or any other event materially affecting its value has occurred or it has been lost or stolen, such head shall forthwith report the facts to the duly delegated director in writing
20.2All lost or stolen assets should be reported to the delegated director within 24 hours of loss occurring
20.3The duly delegated director shall submit a report in writing to the ACCOUNTING OFFICER setting out the relevant facts relating to the absence/loss of any asset brought to his notice
20.4A register of all lost/stolen assets should be kept and updated by the duly delegated director. The ACCOUNTING OFFICER should review the register on a quarterly basis
20.5Assets lost/stolen must be written off. These write off’s must be authorised as per delegation of MPSC. The asset register must be updated with any loss or damage of the asset.
DISCLAMER
This document replaces any previous policies. It is the duty of all directors and employee to familiarize himself / herself with all relevant policies and procedures. Non-compliance to this policy will lead to disciplinary action.
SIGNATURES –APPROVED AND RATIFIED BY:
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MPSC Chairperson- Mr.Frank Fredericks Date:
On behalf of MPSC board of directors
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