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Finance (Asset Purchasing)

2 min read

First created March 2015
Last reviewed 2 June 2020
Review cycle Two years
Approver Senior Leadership Team
Owner Finance Manager
Stakeholders Board, staff

Overview #

The College has invested significant reserves in property and equipment. Procedures to ensure the effective custody, safeguarding, and management of assets are implemented.

Definitions #

1. Fixed Assets fall within the definition of Property, Plant, and Equipment (PPE). The nature of Property, Plant and Equipment is defined under AASB 116 (Australian Accounting Standards).
2. Property, Plant and Equipment (PPE) means tangible items that:

  1. are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes;
  2. are expected to be used during more than one financial reporting year.

The important element of this definition is that PPE assets are not consumed during one accounting cycle. Rather, they are used in both the current and future periods and form part of the operational structure of the College. This distinction is important because some purchases are not PPE purchases, despite that the transaction may have a high value. Assets are expected to contribute towards the generation of financial benefits into the future.

Purchasing Equipment #

When purchasing equipment, the following procedures and considerations apply:

  1. Consult the budget holder, Principal, CEO, or Finance Manager for initial approval for a capital transaction.
  2. Equipment to be purchased from a reputable company.
  3. Equipment is to be covered by a suitable warranty.
  4. Equipment in excess of $3,000 value requires 2 or 3 price quotations as determined by the Finance Manager or CEO.
  5. Equipment is to comply with current safety standards applicable for the category of asset being acquired – electrical standards and child-safe standards are examples.
  6. Equipment should comply with other standards as approved by the Leadership Team from time to time. These standards are to be considered in advance of committing College funds towards the acquisition of an asset.
  7. In evaluating possible alternative assets for purchase, consider both price and value. Value is often indicated by suitability for purpose, and the quality and durability of the item under consideration. Price alone ought not to over-ride judgments about value.