Regularisation of Historic Property Expenditure by State-Integrated Schools

Regularisation - Questions and Answers

(Last updated 26-Feb-08)

a) Are capital works assets to be removed from the school's Asset Register at 31 Dec 07 and disclosed in 2007 accounts separately?

Yes - all capital works (as per the decision flow chart) are proprietor's property and should be removed from the school's asset register.

If the capital works asset had a book value of less than $40,000 at 31 Dec 2007 then it can be written off.

All capital works assets with a book value over $40,000 at 31 December 2007 should be included in the schedule of assets for the equitable lease.

b) Should we consider the book value of individual or combined capital works assets for the $40,000 threshold?

Consider each item individually.

c) Can the board choose to write of assets with a current book value of less than $40,000?

Yes. Assets with a current book value of less than $40,000 can be written off. This applies even if the aggregate of all capital works assets on the fixed asset register is more $40,000 - the test refers to individual assets.

d) What if our asset register has already been finalised for 2007 and rolled into 2008?

Your auditor will understand the reason for changes and has been briefed by the ministry and the Office of the Auditor General on what to expect. As long as the assets are declared separately in the annual accounts the asset register could be updated for 1 Jan 08. (You may be able to restore the asset register to pre-roll to do the adjustments)

e) Does the actual amortisation of the equitable leasehold interest start in the 2008 financial year?

Yes - the amortisation starts in 2008. Capital works should be depreciated up to 31-Dec-07 and moved out of the asset register at their year-end book value.

f) Does our school have to adopt the economic lives suggested by the ministry, even though they might be different to the rates currently used by the school (refer p 4.3 of the Guidance Note)?

No - the school can use the economic life that they were using for depreciating the assets.

g) How can this exercise be managed as smoothly as possible given the very tight timeframe?

Ideally you will have identified the assets and their values before the February board meeting. The board can then decide if it wishes to write off any assets or include them as an equitable leasehold interest.

If you can have the equitable lease document and the application to the ministry ready for this board meeting it could be signed and then sent off to the proprietor / ministry as required.

The annual reports could be prepared on the assumption this was all going to happen so the audit could continue. Any last minute hiccups could be reflected in any audit adjustments.

h) We don't have any capital works assets on our school asset register or balance sheet - what do we need to do?

Only confirm at your Board meeting that this is the case. You may get a follow up call from the Ministry of Education, so it would be helpful if you send a letter confirming that you don't have any capital works assets for regularisation for Ministry files.

i) We applied to the Ministry of Education and had s69 approval for a capital works asset in a previous year - do we have to apply again and move that asset out of our asset register?

You do not need to apply again under s69 for those particular assets, that approval has already been given.

However, you do need to ensure that all capital works assets have moved out of your fixed asset register and are either included in the schedule of assets for the equitable lease or written off (the latter is an option if the book value at 31 December 2007 is less than $40,000).

Identify any assets in the equitable lease schedule of assets that have already been approved under s69 - for your own and the Ministry of Education records.

You still need to apply for s69 approval for any other capital works assets.

j) We acquired a capital works asset that was written off in a prior year - should that be included in an equitable leasehold interest?

Yes.

k) In the Equitable Lease document, schedule A reads as though there is only one capital works asset - how can we complete Schedule A for multiple capital works assets?

Schedule A can be replaced with the printout of the capital works assets spreadsheet because the columns equate to the headings within the schedule.

l) The spreadsheet for creating schedule A calculates numbers differently from our asset register - why is that?

The first version of the spreadsheet is based on the original cost of each asset and assumes assets were acquired at the end of each financial year. That may result in a different book value at 31 December 2007 from your asset register.

There is now a second version of the spreadsheet you can download that bases the amortisation calculation on the book value of the asset as at 31 December 2007.

m) We can't make the deadline for getting our equitable lease documents to our local Ministry of Education office by 28th February 2008 - what should we do?

Keep working through the process and get your documents to your local Ministry of Education office as soon as possible after 28th February 2008. The Ministry of Education will process and return your documents as quickly as they can but may take up to a month i.e. delays now may cause delays in getting your records to your auditor by 31st March 2008.

If your documentation has been delayed with your proprietor, please advise your regional financial advisor in the Ministry of Education and we will work through the Association of Proprietors of Integrated Schools to resolve the situation.