Policy Financial Management Assets (FMPM 200 - FMPM 399) FMPM 323 - Disposal of Property, Plant and Equipment Procedure

FMPM 323 - Disposal of Property, Plant and Equipment Procedure


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Intent

This Procedure sets out the requirements for identifying and recording the disposal of items of Property, Plant and Equipment, to ensure the University's Fixed Asset Register provides an accurate, complete and timely record of the University’s assets.

Scope

This procedure applies to the disposal of University owned Property, Plant and Equipment.

In the absence of any specific requirements, this Procedure also applies to Property, Plant and Equipment purchased under a grant or other contractual arrangement. Noting that any contract requirements relating to asset disposal take precedence over the requirements of this Procedure.

FMPM 323 does not apply to the disposal of portable and attractive items (refer FMPM 330) or intangible assets (refer FMPM 350).

Definitions

The definitions used in this policy are found in the Financial Management Practice Manual Glossary

Procedure

1. Disposal of Plant and Equipment

Organisational Unit Responsibilities

It is the responsibility of the Organisational Unit to complete an Asset Disposal/Transfer Form in Service Now for all Plant and Equipment under their control that is:

  • obsolete;
  • no longer in use;
  • dumped;
  • broken and not to be repaired;
  • lost or stolen;
  • to be transferred to another Organisational Unit;
  • to be transferred to a Controlled Entity; or
  • to be transferred to an external entity.

The Organisational Unit must not dispose of any asset without completing the Asset Disposal/Transfer Form and consulting with the Asset Accountant in Financial and Business Services.

Financial and Business Services Responsibilities

After receiving the Asset Disposal/ Transfer form from the Organisational Unit the Procurement team in consultation with the disposing Organisational Unit will:

  • determine the most appropriate method of disposal:
    • Internal Sale: by circulating a for sale by tender notice as appropriate to staff through @JCU
    • External Sale:
      • by placing an external advertisement for sale by Tender
      • Agent
      • Auction
    • Donation
    • Trade In
    • Scrap
    • Dumping

Assets will only be dumped as a last resort when all other methods of timely and cost effective disposal are eliminated.

  • evaluate tenders received where applicable;
  • advise successful and unsuccessful tenders where applicable;
  • arrange for collection of the items by the receiving party;
  • where an asset is to be transferred, internally obtain approval from the receiving Organisational Unit;
  • Asset Accountant to update the Fixed Asset Register; and
  • Divisional Finance Manager make any required adjustments to the Divisional financial forecast.

Conditions of Sale, Donation or Trade In

The procurement team in consultation with the accountable Organisational Unit will determine the most appropriate conditions of sale, donation or trade in.

For disposal by sale the JCU Asset Disposal Terms and Conditions apply:

Inspection: The items shall be available for inspection by interested parties.

No warranty given: No warranty shall be given as to the quality of the items, or as to their fitness for any particular purpose, notwithstanding any representations made in respect of the items, they shall be advertised to be sold as where they lie with all faults and with all errors and mis-statements or description, measurement quality or otherwise and the purchaser shall have no claim against the University in respect of any such faults, errors or misstatements.

Payment: Payment for the items is to be made by cash to the University cashier or by direct deposit to the University general operating account before transfer or removal from the University.

Delivery: Unless otherwise agreed, delivery of items shall be at the expense of the purchaser at the time and from the place specified by the University.

Property and Risk: The property and risk in the items purchased shall pass to the purchaser immediately upon payment being made for the items.

The Asset Accountant (Financial and Business Services): Upon receipt of the Asset Disposal/Transfer Form the asset accountant updates the Register of Capital Assets. All disposal proceeds and the gain/loss on disposal are reconciled with the General Ledger. Gains and losses are attributed at the Organisational Unit level.

Proceeds of Sale: Except where special conditions exist (eg grants) the net proceeds of sale or transfer will be credited to the account nominated on the Asset Disposal/Transfer Form.

Theft or Loss: In the case of theft or loss of equipment, a Loss/Damage report must also be completed in ServiceNow which will then be forwarded to the appropriate Financial Delegate as per the Financial Delegations Register and the Asset Accountant in Financial and Business Services, this will enable the appropriate accounting procedures and Fixed Asset Register maintenance to be performed.

Refer FMPM 450: Insurance and FMPM 920: Losses.

Trade-In:

When plant and equipment is being traded-in:

  • the gross value of the purchase and the trade-in value must be shown on the purchase requisition; and
  • an Asset Disposal/Transfer Form must be completed for the item of equipment being traded-in.

Goods and Services Tax: For disposals that are taxable supplies for the purposes of the Goods and Services Tax, the purchaser should express the offer as inclusive of GST (refer FMPM 732: Procedure - Goods and Services Tax (GST)).

2. Disposal of Real Property

In conjunction with relevant stakeholders the Director of Estate is responsible for identifying Real Property for disposal. All disposal of Real Property will occur in accordance with the Real Estate Dealings Policy.

Identifying Assets for Disposal

Disposal of Real Property may be identified as a result of:

  • an annual review of impairment performed in accordance with the University accounting policies by Financial and Business Services and Estate;
  • changes to campus master plans; or
  • changes to operational requirements outside the impairment or planning process.

Approval Process

The Estate Advisory Committee will advise the Vice Chancellor, and seek approval from the Vice Chancellor, regarding the purchase or sale of land or property. Estate Committee will evaluate proposals for the disposal of Real Property.

When Real Property is identified for disposal the following actions must be undertaken, prior to disposal:

  • notification via completion of an asset disposal form in ServiceNow to the Asset Accountant and Director Estate of the intention to dispose of Real Property;
  • identification of any University obligations and / or restrictions in respect of disposal, for example conditions relating to an asset obtained under a grant contract or through a bequest or donation;
  • a review by the Asset Accountant of the carrying value of the land and / or buildings recorded in the Fixed Asset Register. This review may result in the need for a third party valuation to ensure compliance with Australian Accounting Standards;
  • performance of an impairment assessment by Financial and Business Services in consultation with Estate;
  • documentation of a disposal strategy proposal (refer below);
  • endorsement of the disposal strategy proposal from Estate Committee or Council ; and
  • provision of all documentation and approvals to the Asset Accountant; and
  • obtain approval from the financial delegate.

Disposal Strategy

The Estate Committee, will evaluate the disposal strategy for the assets identified for disposal.  The strategy will vary based on circumstance but must include consideration of the following:

  • the disposal options and an assessment of the benefits associated with each option (Demolition, Sale etc);
  • expectation of any proceeds to be obtained through disposal;
  • risks and benefits associated with the disposal;
  • timing of disposal; or
  • additional resources required to effect the disposal.

Notification of Disposal

The Asset Accountant must be notified immediately when the disposal is completed. This notification must include any changes from the original disposal strategy and any third party documentation relating to the disposal. On receipt of this information the Asset Accountant will make necessary adjustments to the University Fixed Asset Register.

Related policy instruments

Please access the Asset Disposal / Transfer Form and the Loss / Damage Report Form via Service Now.

Financial and Performance Management Standard 2019

For enquiries in relation to this FMPM Procedure please contact capitalandinfra@jcu.edu.au

Administration

NOTE:  Printed copies of this procedure are uncontrolled, and currency can only be assured at the time of printing.

Approval Details

Policy Sponsor

Deputy Vice Chancellor, Services and Resources

Version no

19-1

Date for next Major Review

20/12/2022

Revision History

Version

Approval date

Implementation date

Details

Author

19-1

20/12/2019

06/01/2020

Amended to reflect changes in asset disposal requirements and changes to Committee charter

Manager, Strategic Procure-to-Pay

17-1

08/12/2017

08/12/2017

Minor amendment to reflect current organisational structure

Quality, Standards and Policy

15-01

08/09/2015

09/09/2015

Policy Sponsor and Approval Authority updated to reflect the approved Policy and Delegations Framework

Quality Standards and Policy Unit

Contact personManager, Strategic Procure-to-Pay

Keywords

Asset, procedure, policy, disposal, plant and equipment