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Public sector organisations have a statutory obligation to report physical non-current assets at ‘fair value’ in their annual financial reports. The Australian Accounting Standard AASB 116 stipulates that an asset’s ‘fair value’ is determined through consideration of its current market value.
A key issue facing many public sector organisations is that many of their physical non-current assets are highly specialised, with the markets for such assets generally non-existent. This is particularly relevant for major water infrastructure including pumping stations, sewage treatment plants, pipelines and the like.
In the absence of market based information, AASB 168 and relevant Treasury guidelines allow for physical non-current assets to be valued using the ‘depreciated replacement cost’ method. This is determined by calculating the asset’s current replacement cost less any accumulated depreciation, to reflect the portion of the asset’s useful life that has already been consumed. Advisian takes the following approach to determine fair valuation:
Sydney Water Corporation & Sydney Catchment Authority
Assisting with the revaluation of their existing water infrastructure assets including sewage treatment plants, water filtration plants, above and below ground water mains and tunnels involving:
Gosford and Wyong Council
Due to Advisian’s understanding of financial principles and extensive experience in the costing, constructability and delivery of complex infrastructure projects, our clients in the water industry have confidence: