Annual Report 2014-15

NOOSA SHIRE COUNCIL

Notes to the financial statements                                                            ~
For the year ended 30 June 2015
  14  Fair value measurements continued

      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. As 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 such these assets were classified as having been valued using level 3 valuation inputs.
      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.
      The following table provides a summary of the unobservable inputs and an assessment of the sensitivity
      of these to the fair value measurement.

  pe        Ree               oe inputs,         [os oo Market Inputs. 0c [-<; Amount of Potential Impact. _

                               Relationship
                               between asset
                               consumption
   Specialised Buildings       rating scale and
                               the level of
                               consumed
                               service potential.           -2.50%        2.50%|-$ 1,489,286.00 | $ 1,489,286.00

      Other Infrastructure Assets (level 3)
      Other infrastructure was last comprehensively valued as at 30 June 2012 using the cost approach by
      Aurecon Australia Pty Ltd. This approach involved componentising the assets into significant parts
      with different useful lives.      po
                                        {                                                       R
      Asset values for the period ended 30 June 2015 have been reviewed with reference to relevant cost indices.
      This review indicated that there was no evidence to suggest any material changes to fair value had
      occurred. As a result of this, no indexation has been applied to this class.
      A comprehensive valuation of this class will be undertaken in 2016. The valuation of other infrastructure has
       been determined as a Level 3.

      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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