CIPFA - Performance in Public Services: Property
Capital Accounting and Valuation
The adoption of International Financial Reporting Standards (IFRS) is the most significant change in financial reporting in the UK public sector since the adoption of resource accounting. This has a impact on asset management systems and staff including both Accountants and Valuers. Fixed assets will be measured and recorded differently, particularly as a result of revaluation bases, impairment, revaluation losses and a stronger emphasis on component accounting. It is also clear that those organisations who to date have used spreadsheets will no longer be able to do so. CIPFA Property's AssetManager.NET has been revised to cater for IFRS including: Our software team have been working very closely with colleagues within CIPFA who not only drafted 'The Code' but are also providing practitioners guidance. CIPFA Property have also been working closely with both CIPFA's Policy & Technical Team and the RICS to produce guidance for both Valuers and Accountants in respect of componentisation.
Housing Module
The Housing module allows for recording of Housing Groups, Archetypes and individual units. These assets can be revalued in the Valuation module and feed into Capital Accounting in order to form part of the balance sheet.
Valuation Module
The valuation module is designed to allow valuations to be held for properties at land and building level, also valuation of housing stock and plant vehicles & equipment assets. Several methods of valuation can be held but only one of the valuation methods for the asset can be passed to the accounting entries module. Impairment can arise when an asset is re-valued and this is automatically calculated and recorded. A re-instatement valuation for insurance purposes can also be held.
Capital Accounting Module
This module handles the accounting entries required to fulfill the capital accounting requirements as laid out by the Chartered Institute of Public Finance and Accounting (CIPFA). This requires that all assets made up of properties, buildings, housing and plant vehicles & equipment must be valued and included in the Authorities' consolidated balance sheet. It is also required that all assets must be charged to their respective users (cost centres) by means of a notional interest charge and depreciation where applicable. The charges are applied to individual cost centres and there is functionality to set up the necessary asset records.
The balance sheet and charges are generated for a financial year. Within a financial year there are changes to both the asset and cost centre details. The functionality to record this is referred to as 'transactions'. Various transactions can be entered against the assets for enhancements, part disposals or impairment assessments. The changes to GCA brought about by a transaction will not have any effect on any asset valuation in any module.
There is a roll over function that uses the end of year closing figures to generate the start of the next year's balance sheet. The roll over functionality also clears out the previous year's transactions and archives them in a separate database with view only access.
Regulations also require plant, vehicles and equipment to be included in the balance sheet and the functionality to identify and value such records is contained in this module.
There will be a full audit trail on all movement of Property, Building, Housing, PV&E, transactions, cost centres and valuations.
A Budget year facility allows for a copy of the live database to be taken and 'what if' scenarios can be performed prior to applying changes at the live data. These Budget years can be rolled over in the same way as the live financial year.
Plant Vehicles & Equipment Module
The Plant Vehicles & Equipment module allows for recording of details of all PVE assets. These assets can then be attached to Properties or Buildings in the Core and revalued in the Valuation module for inclusion in the Capital Accounting module.
