Annual Report 2017-18

                                                                                                  Financial Statements 2018



Noosa Shire Council

Notes to the Financial Statements
for the year ended 30 June 2018

Note 13. Fair Value Measurements (continued)


Buildings (Level 3)
For the majority of Council's buildings, there is no active market due to the specialised nature of the assets and the
services they provide. The fair value of buildings were independently valued by registered valuers Australia Pacific
Valuers, effective 30 June 2015.

Due to the predominately specialised nature of local government buildings, the valuations have been undertaken using a
cost approach. This is deemed to be a level 3 input.

Under this approach the cost to replace the asset is calculated and then adjusted to take account of accumulated
depreciation. The valuer disaggregated the building into different components and for each component determined a
value based on the interrelationship between a range of factors. These include asset condition, legal and commercial
obsolescence and the determination of key depreciation related assumptions such as pattern of consumption and future
economic benefit.

Inputs to the valuation include the design and construction, average cost of construction, condition and consumption
score for each component. Where these are supported by observable evidence obtained via inspection and market
evidence they have been classified as a Level 2 inputs. The unobservable inputs (such as estimates pattern of
consumption and (based on the asset consumption score) its relationship to the assessed level of remaining service
potential of the depreciable amount, required extensive professional judgement and impacted significantly on the final
determination of fair value. As these inputs are significant to the valuation the overall valuation has been classified as
level 3.
The consumption rating scales were based initially on the past experience of the valuation firm and industry guides and
were then updated to take into account the experience and understanding of Noosa Shire Council's own engineers, asset
management and finance staff. The results of the valuation were further evaluated by confirmation against Noosa Shire
Council's own understanding of the assets and the level of remaining service potential.

Building index rates for the period since last valuation to 30 June 2018 shows no significant material changes and
therefore the values are considered still at fair value. As a result of this, no indexation has been applied to this class.

Other Infrastructure Assets (Level 3)
Other Infrastructure was last comprehensively valued as at 30 June 2016 by Aurecon Australia Pty Ltd.

The valuation technique used to determine fair value is essentially based on price modelling of the fair value through
'Level 3' unobservable inputs. These include a variety of sources to obtain the best information available for each asset
type, including actual contract prices or supply quotes for similar assets.
The unit rates were predominantly developed from first principles by estimating the plant, material and labour required for
asset replacement. The base rates were sourced from local suppliers estimates and quotes, contract schedules for work
recently completed and council records. Where costs have not been readily available then rates were obtained from
Aurecon's cost database or the Rawlinson 2014 edition of the Australian Construction Handbook.
Council applied an index rate of 5.1% to the value of Other Infrastructure for the period 1 July 2017 to 31 March 2018.
This resulted in an increase in value of $2.59m.

Accumulated Depreciation

In determining the level of accumulated depreciation, assets are disaggregated into significant components which exhibit
different useful lives. Useful lives are an estimate of the total service capacity in years for that type of asset.




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