Councils continue to find valuation processes, asset management plans and asset data maintenance a challenge

The Queensland Audit Office in 2020 found that councils reported total property, plant and equipment assets of $112 billion (2019: $107 billion). No doubt other state bodies across Australia performed the same research. 

They found asset management valuation activities undertaken by councils as complex, with most councils relying on the expertise of external valuers to assist in determining fair values (the amounts for which the assets could be exchanged in a fair transaction). 

What is the issue for local councils? 

Asset valuation continues to be one of the year-end processes most often not completed in a timely manner. COVID-19 travel restrictions made it even more complex this year, with valuers unable to visit some communities to assess the value of the assets. 

Asset management is critical to the long-term sustainability of the local community. If councils do not budget appropriately for the significant cost of maintaining, replacing, or upgrading assets, they risk being unable to provide safe and consistent services to the community. 

An effective asset management plan is reliant on good data about assets. Asset data is maintained on councils’ financial systems and on the geographic information systems they use to capture, store, and manage the detailed components of their assets (such as roads, bridges, and dams). The data in these two systems should be reconciled (matched) periodically and any differences should be resolved in a timely manner.  

Are you up to date? 

To ensure effective decision-making and efficient use of public money, engineers (who build and maintain assets) and accountants (who manage the finances) must work with the same asset data. When this is not the case, a council’s decisions may be compromised, and it is at risk of wasting public money. 

We can help – with insight and hands-on expertise 

Strategic Directions have been helping organisations to align their strategy and providing tools and people to help change and transition to performance. Don’t take our word for it. Be sure to call and ask to speak to one of our clients. We would be glad for them to tell you how we do it better.