2017-06-06 Services & Organisation Committee Agenda

SERVICES & ORGANISATION COMMITTEE MEETING AGENDA   6 JUNE 2017




                                                   Page 68 of 94

SERVICES & ORGANISATION COMMITTEE MEETING AGENDA                                       6 JUNE 2017

   COUNCIL POLICY - NON CURRENT ASSET ACCOUNTING POLICY

   16    Asset Impairment
   All non-current assets including intangible assets are to be reviewed on an annual basis for indicators
   of impairment by asset custodians as detailed in the asset responsibility matrix.
   Where the fair value of the asset exceeds the recoverable amount it is recorded as an impairment
   loss. The recoverable amount of an asset is the higher of its fair value less costs to sell and its value
   in use. Where assets have been revalued at fair value there should not be any impairment loss as
   the recoverable amount should be equal to the fair value.
   An impairment loss is recognised as an expense in the Statement of Comprehensive Income, except
   where the asset is at fair value. When there is an impairment loss on a revalued asset the impairment
   loss is offset against the asset revaluation surplus of the relevant asset class to the extent available.
   Any remaining loss is then expensed in the Statement of Comprehensive Income.

   17    Materiality
   Materiality plays an essential part in the decision making process and preparation of the general
   purpose financial statements. This is because information contained or omitted can impair its
   usefulness to users.

   Materiality is a concept which requires professional judgment. An omission or misstatement of an
   item is material if, individually or collectively, it would influence the economic decisions of users of
   the financial statements or the accountability of management or governing body.
   In assessing materiality, the size and nature of the omission or misstatement are usually evaluated
   together. The surrounding circumstances will also be considered.
   As guidance in considering materiality thresholds the following can be used:
   a) | anamount equal to or greater than 10% of the appropriate base may be resumed to be
         material;
   b) | an amount equal to or less than 5% of the appropriate base amount may be presumed to be
         not material; and
   Cc) | anamount between 5% and 10% requires judgment.

   18    Disclosure in the Financial Report
   If non-current assets are stated as revalued amounts, the following will be disclosed:
   a)    The effective date of the revaluation;
   b) | Whether an independent valuer was involved;
   c)    |The methods and significant assumptions applied in estimating the item’s fair values;
   d)    ~The extent to which the item’s fair values were determined directly by reference to observable
         prices in an active market or recent market transactions on arm’s length terms or were estimated
         using other valuation techniques; and
   e)    The revaluation reserve, indicating the change for the period and any restrictions on the
         distribution of the balance to shareholders.

                                                                                      Page 68 of 94