Where asset revaluations are required for the year ending 30 June 2022, the details need to be obtained by the end of July 2022, to ensure sufficient time to meet the 30 September 2022 timeframe to submit the annual accounts to the auditor. Also, any
valuer’s report should state the valuation has been prepared for the purposes of the local government’s financial reporting requirements and is in accordance with the relevant Australian Accounting Standards as captured in the scope of
works supporting the valuation.
Irrespective of whether a revaluation is being conducted in-house or by an independent contractor, the valuation technique used should be current replacement cost and not depreciated replacement cost.
If you cannot get the asset valuations in time, DLGSC advice is to proceed without them, but be aware that this may result in a qualified audit, if the local government is unable to determine if the values
reported in the final financial statements materially represent fair value. The Department encourages early discussion with the auditor to determine the impact on the local government. Significant audit findings in the audit management letter to those
charged with governance may be reported as the assets have not been revalued with sufficient regularity in accordance with legislative requirements. This may impact on the audit report in terms of expressing an opinion on the financial statements
and other regulatory reporting if triggered.
The Australian Accounting Standards Board (AASB) has issued AASB Exposure Draft ED 320 on Fair Value Measurement of Non-Financial Assets of Not-for-Profit Public Sector Entities, which will be applicable to all WA local governments.
The Exposure Draft proposes implementation guidance in respect of non-financial assets not held primarily for their ability to generate net cash inflows, regarding:
It is proposed that the amending Standard would be applicable to annual periods beginning on or after 1 January 2024, for example 2024-25, with earlier application permitted.
Local governments should monitor developments with the exposure draft, plus DLGSC will provide further advice to the sector once a decision is made on the amending standard.
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