1. SESSION 10 ASSET SEGMENT PRESENTED BY: NATIONAL TREASURY

2. 2 ASSET SEGMENT New segment on BAS Distinguish Assets and Non Assets Purpose: Improved management of assets Proper recording of expenditure

3. 3 BENEFITS: ASSET SEGMENT One central list of all capital assets Economic classification - Project segment Asset segment provides for Tangible: Physical, Movable/Immovable Intangible Non-assets Assets less than R 5 000 Classes and sub-classes of assets Asset items “Breakdown” allowed Aligned to categories in AFS/Asset registers

4. 4 AUDIENCE QUESTION Why should the breakdown facility on the asset segment be utilised if it can be done in the project segment? A project consists of different assets with no departmental specific detail and direct link between them. The asset segment breakdown can provide the detail.

5. 5 METHODS OF ACQUISITION Asset purchasing (buy) Asset construction (build) Hiring of assets Asset transfers Asset exchanges

6. 6 AUDIENCE QUESTION Is the item segment not describing the type of asset? No. It only indicates the method of acquisition. Where asset is purchased: Item: Elevator/Escalating systems Asset: Tangible capital asset: Buildings and Other fixed structures: Non-residential buildings: Office building

7. 7 AUDIENCE QUESTION (CONTINUED) Is the item segment not describing the type of asset? Where asset is leased: Item: Lease payments Asset: Tangible capital asset: Buildings and Other fixed structures: Non-residential buildings: Office building

8. 8 GRAP APPLICABLE TO ASSETS GRAP 11 - Construction Contracts GRAP 12 – Inventories GRAP 13 – Leases GRAP 16 – Investment Property GRAP 17 – Property, Plant and Equipment GRAP 100 – Non-Current assets for sale GRAP 101 – Agriculture GRAP 102 – Intangible Assets

9. 9 ASSET SEGMENT: ANALYSIS TWO QUESTIONS What is the distinction between an asset (capital) and non-asset (current) expenditure? AND Does the transaction relate to an asset, and if so, which category of asset?

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11. 11 SEGMENT CATEGORIES Major Asset segment classes Buildings and other fixed structures Machinery and equipment Heritage assets Biological/Cultivated assets Specialised Military assets Software and other intangible assets Land and subsoil assets

12. 12 ASSETS DEFINED Asset – Components of definition Resource Control Future economic benefits/service potential More than one reporting period

13. 13 ASSETS DEFINED Buildings and other fixed structures Buildings Fixed structures inhabitable by people, animals, plants or utilised as storage areas Other fixed structures Structures other than buildings i.e. roads, dams, bridges

14. 14 ASSETS DEFINED Biological/Cultivated assets Biological assets are living animals or plants which are actively managed to effect biological transformation Machinery and equipment Mechanical or electrical appliances, including furniture, utilised in execution of tasks

15. 15 ASSETS DEFINED Land and subsoil assets Land excludes Improvements or Cost of transfer of ownership Subsoil assets proven reserves of oil, mineral and ore

16. 16 ASSETS DEFINED Intangible assets Identifiable Non-monetary asset Without physical substance

17. 17 INTANGIBLE ASSETS DEFINED Identifiably criteria: Capable of being separated and dealt with individually Arises from contractual rights, excluding rights granted by statute Distinguish goodwill and intangible Goodwill – payment in anticipation of future economic benefits from assets that cannot be individually identified

18. 18 INTANGIBLE ASSETS DEFINED Assets incorporating tangible and non-tangible features: Exercise judgement to assess which element is more significant Knowledge may result in physical asset. Physical substance secondary to knowledge embodied in asset

19. 19 AUDIENCE QUESTION The department has developed software utilised by Land and Quantity surveyors, how is this classified in the asset segment? Allocated to following asset class –Item: Inventory/Compensation of Employees –Asset: Intangible asset

20. 20 ASSETS DEFINED Heritage assets Assets that have unique cultural, environmental, historical, natural, scientific, technological, or artistic significance for the benefit of future generations

21. 21 AUDIENCE QUESTION Are maintenance, repair and running costs allocated to assets in the asset segment and if so why? Yes, in order to identify the asset and track accumulated expenditure on that asset/group

22. 22 EXAMPLE ALLOCATIONS Repairing a standalone air-conditioner Allocation Item: Contractors: Maintenance of Equipment Asset: Tangible capital asset: Machinery and Equipment: Other machinery and equipment: Building Air-conditioning system

23. 23 EXAMPLE ALLOCATIONS Buy a truck to be used in construction of a community centre Allocation Item: Purchase/Construction Capital assets: Machinery and equipment: Transport equipment: Trucks Asset: Tangible capital asset: Machinery and Equipment: Transport equipment: Trucks

24. 24 EXAMPLE ALLOCATIONS Permit issued for a hiking trail in a Provincial Park Allocation Item: Sales: Goods and Services: Administrative Fees: Hiking Trails Asset: Non-assets related

25. 25 EXAMPLE ALLOCATIONS The department is constructing a dam utilising consultants Allocation Item: Consultants and Professional Service: Engineering Civil Asset: Tangible capital asset: Other Fixed Structures: Water Dams

26. 26 EXAMPLE ALLOCATIONS The department is constructing a car park from own account? Allocation Item: Inventory/Compensation of employees Asset: Tangible asset: Other fixed structures: Car Park

27. 27 EXAMPLE ALLOCATIONS The department transfers funds for asset construction to a municipality Allocation Item: Transfers and Subsidies Asset: Non-asset

28. 28 AUDIENCE QUESTION What asset allocation should be used for a payment of a Travel & Subsistence advance? Non-asset – No resource controlled, no future economic benefits/service potential

29. 29 ASSET SEGMENT SUMMARY Provides for details of asset classes Eliminates duplication in Item Segment Allows for capturing of own account transactions Alignment with the Asset Management Guide Not Asset Register

30. 30 For any additional questions or issues for clarification, please contact the National Treasury SCOA Technical Committee at: Call centre: (012) 315 5311 E-mail: scoa@treasury.gov.za Website: http://scoa.treasury.gov.za