We were pleased to welcome Eleanor Greene to Scribe Academy™ this week. Eleanor is Chief Accountant at Do the Numbers Limited as well as Secretary at the Parish Council Internal Auditors Forum and SLCC Hampshire and has been auditing accounts since 1997.
She joined us to help provide a sanity check of the AGAR and have a Happy Year-Ending.
Auditing for 50 large and small councils, she shared some of this experience with 70+ attendees on Zoom and also the Scribe team!
🗝️ Key Resources
⏯️ Video is available for playback here
⌛ Biggest Year End Challenge - Time
We also ran a poll on Year End challenges, with finding the time to do it being the biggest and understanding audit requirements also being a difficult area.
With the most popular topic being the Asset Register, we decided to sum up some of Eleanor’s top tips on this.
🐩 Your Five Top Tips:
1. Purchase Value
The most appropriate and common asset valuation method within councils is historic cost.
This means recording assets at the original purchase value. There is also no depreciation on assets as they are not included in the balance sheet. They are not included in the balance sheet because the total assets figure would then need to be included again in the reserves section. As Eleanor suggested, how would you justify raising a precept with such large reserves!
2. Refurbishment Costs
These costs are an addition to the asset register
The original asset (e.g. building) does not change. Refurbishment costs can be added to the asset register which essentially becomes a capital improvement register, helping you decide when you will need to put money aside for a refurb again.
3. Regular Review
You are allowed to review the asset register.
It is perfectly acceptable to tidy up the asset register, if not, advisable. If the asset register figures change, you do not need to mark this as restated but you will need to add a comment to the AGAR and clearly state why this has been changed. The only occasion you would mark your Line 9 figure as restated is if you have specifically been asked to do so.
1+ year bonds are an addition to the asset register.
Make sure to think about the timescales, short-term assets are less than 1 year and included in Line 8. Long-term assets are more than 1 year and included in Line 9.
5. De-minimus value
There is no de-minimus value for asset registers.
It is worth considering if the council will hold the asset for more than a year and if it will be ensured against theft. You don’t want the asset register to become a record of inventory, however, if an asset is stolen and has been included in the asset register approved by the council, this can be provided to the insurer to assist with the claim.
🙋 Question and Answer
Finally, we had lots of questions. Here they all are, with their answers....
Question - What if an asset is revalued?
Answer - This will generally only be freehold building and there is no requirement to do this.
Question - Do you have a separate register for insurance values then?
Answer - You can maintain an insurance schedule and compare this with the asset register to ensure that all assets as recorded are appropriately insured.
Question - We just took over a pavilion and have recorded it as the rebuilding value for insurance policy / asset register - is this ok?
Answer - No - if you have taken over the building but didn’t buy it, you record it in the asset register at £1. You put in the cost to the council through the cashbook.
Question - Tools & equipment - what is the min value to be classed as an asset?
Answer - There is no de-minimus value but you should consider if the council will hold the asset for more than a year and if it will be insured against theft.
Question - We are having a reinstatement valuation on our building, following a refurbishment. Should I restate or change?
Answer - The refurbishment cost is added as an additional asset in the asset register, the original cost doesn’t change.
Question - I have inherited an asset register which includes paths refurbished in a leased cemetery. Should I remove them from the asset register?
Answer - Yes, this can be added to the asset register and essentially help form a capital improvement register - having it there is useful.
Question - Should I include new wall heaters provided as part of the refurbishment or just have a single figure for the refurbishment amount ?
Answer - If the wall heaters aren’t going to last as long as the refurbishment, it may not be worth having them as a separate asset, assuming they will need replacing sooner.
Question - The Parish Council purchased an area of land for £3,000 to prevent it being used for housing. Does this get recorded as £1?
Answer - It depends, some auditors will say to record the cost at £3000 and hold it at £1, others will say to record the cost at £3000 - so long as you can justify and show you spent the £3000.
Question - If you recalculate your Asset Register why do you have to put the new amount in for last year as restated? When it is only now the asset register has this value?
Answer - You only restate last year if you have been asked to change last year. If you have reviewed your asset register, disposed of assets and acquired assets, this is simply a movement between last year and this year.