2014-01-13 Deamalgamation Report Attachment

Attachment 4:   Position Paper – Allocation of Other Items




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Attachment 4:       Position Paper — Allocation of Other Items

 Sunshine Coast Council

 De-amalgamation Transfer

 Position Paper — Allocation of Other Items

 Background

 Sections 38 and 39 of the Local Government (De-amalgamation Implementation) Regulation 2013 and Section
 6.1 of the de-amalgamation transfer methodology requires the transfer committee to decide on the split of
 assets and liabilities between the continuing (i.e.SCC) Council and new (i.e.NSC) Council to determine the
 opening balance sheet position for both entities as at 31 December 2013.

 The de-amalgamation transfer methodology provides the proposed methodology that may be used to
 determine the separation of balance sheet items. For assets (in particular non-current assets), the
 methodology recommends an allocation methodology based on the physical location of the asset to ensure
 that both the new and continuing councils receive all property, plant and equipment required in their
 geographical area to maintain effective service delivery to their respective communities.

 Application to SCC / NSC Separation

 The financial asset register has an identifier contained within each asset record to allow the identification and
 hence effective separation of physical fixed asset records as at 31 December 2013. Although physical location
 will be an appropriate methodology for most ‘fixed’ financial assets such as roads, drainage and buildings,
 further consideration will need to be given to other assets such as plant and equipment (in conjunction with
 any location identifier) to ensure that an equitable allocation of plant and equipment is made to ensure
 business continuity for both entities from 1 January 2014.

 Council’s current asset policy sets a materiality threshold of $5,000 where capital expenditure is recorded as
 an asset in the financial asset register. This means that there are a significant number of physical items under
 the threshold that could be classified as ‘assets’ but are periodically expensed via the operating budget.
 Examples would include information communication technology equipment such as phones and tablet
 computers, small plant and tools, library books, specialised equipment, building furniture, artwork etc. Also
 considered for allocation purposes are items currently under lease (such as vehicles and IT equipment) or
 under trust arrangements.

 Purpose of this Paper

 Both SCC and NSC Transfer Team staff will require direction from the Transfer Committee with respect to
 progressing the identification and separation of assets and liabilities as at 31 December 2013. The purpose of
 this position paper is to provide an equitable allocation methodology for the Transfer Committee to use as a
 basis to provide direction to the organisation when entering into allocation discussions.

 It is expected that working groups will need to be established to progress the allocation discussions,
 particularly with respect to the allocation of fleet and plant assets as well as other items including portable and
 attractive items (phones, laptops, small plant, tools, specialised equipment). Where a methodology has been
 proposed for an asset type or class and consensus cannot be achieved via mutual discussions, the Transfer
 Committee will be required to be the arbiter of a final outcome.

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