Recording MFS Assets

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There are a number of reasons to record Monaro Folk Society assets:

1) Legal Requirement

A listing of assets is required under the ACT Associations Incorporation Act 1999

Under "Annual statement of accounts", the act states:

The statement of accounts must not be misleading and must give a true and fair account of
(a) the income and expenditure of the association during the most recently ended financial year of the association; and
(b) the assets and liabilities of the association at the end of that financial year; ...

The value reported under this requirement would be as at the date of the 30 June report.

2) Auditor Requirement

The society auditor has requested

"a list of assets, together with current valuation. Assets should include both the musical and PA equipment listed on the insurance policy, plus other things such as banners, books etc. If any have been lost, it would be good to see that the circumstances had been reported to the committee."

3) Insurance

The Society's equipment insurance policy requires a complete list of equipment covered and the replacement value of each item. The list must include "Address where equipment is normally stored" and a description of security at normal storage address (Windows: Doors: ), and for each item:

Brand / Model / Description / Serial no. / Sum Insured

The current policy should be checked, but at the time of writing (June 2010) the policy states:

◆ "the sum insured will be the amount specified against each item of equipment in your client coverage summary; and
◆ should be based on the current replacement value (that is the amount it would cost you to buy the same item)."

The "Product Disclosure Statement and Policy Wording" and "Entertainment Equipment Insurance Application" are shown on the insurance policy page under the heading "Entertainment Equipment Insurance"

The equipment insurance runs from 15 June to 15 June each year (unlike the public liability insurance which runs 1 June to 1 June) and equipment custodians should provide an updated list containing insurance items only, to the insurance co-ordinator.

The only items currently insured are the items shown with an insured value on the two PA Coordinators' lists. The two lists are attached to the insurance application as PDF documents, and the grand total of the replacement value totals from these two lists is the sum insured. For security reasons, the location at which assets are held is shown on the insurance schedule, but not on the more widely available asset listing spreadsheets.

For convenience, the PA Coordinators may include any sundry non-PA items that are to be insured, such as stage curtains or lighting, in their lists.

4) Management

The MFS Committee needs to be able to maintain a responsible oversight of the society's assets, and members should be able to find out what we own and who to contact if they have a need. This page (when approved by MFS Committee) sets out MFS policy that applies to all office-holders and committees.

Responsibility for Assets

Each asset has an MFS custodian responsible for the asset and its use. The custodian may be an office-holder (eg Merry Muse PA Coordinator) or an action committee (eg Merry Muse Committee)

Each office-holder or committee must include their asset listing in their annual budget and in their quarterly financial report. If the office-holder or committee is not responsible for any MFS assets then that should be explicitly stated in these documents.

Example asset listing spreadsheets are available on the MFS Members' Site.

The asset identifier is a sequential number allocated by the custodian, using a prefix allocated by the Treasurer, currently:

Office-Holder or Committee Prefix
MFS Committee MC
Membership Secretary Team MS
Treasurer/Bookkeepers TR
Bush Dance Group Committee B
Canberra Contra Club Committee CC
Club Night Organiser CN
Dance Sub-Committee DC
Editor Monaro Musings U
End of Month Dance Committee E
Historian H
Irish Set Dance Organisers I
Merry Muse Committee MM
Monaro Colonial Dancers Committee CD
PA Coordinator Dance D
PA Coordinator Merry Muse M
Set in Their Ways Irish Set Dance Display Group Committee S
The Bush Dancers display group Committee TB
Tuesday Night Music Group Organiser TN
Web Manager WM
Wednesday Night Music Group WN
Woollies Home Band Organiser WH

The asset identifier remains unchanged if the asset is transferred to a different custodian. For example, asset D123 may appear on the Merry Muse PA Coordinator's insured list, and on the Dance PA Coordinator's non-insurance list with zero current value and the comment "transferred to Merry Muse PA Coordinator"

Included Assets

Assets should be included if they:

  • Are to be included in the equipment insurance list, or
  • Cost greater than $1,000, or
  • Are portable and attractive, or
  • May need to be located (eg banners)

Asset Valuation

For insured assets, the replacement value is estimated by the asset custodian.

For all assets, a current value must be estimated for reporting purposes. This may be a depreciated value calculation, or an estimate of current value.

For new assets, the cost may be recorded, and the effective life estimated by the asset custodian. If the estimated effective life is n years then the value is written down by $ 1/n per year.

Example asset listing spreadsheets are available in the mfs-organisers group (File MFSAssetsV1.xls) and also on the MFS Members' Site. The "PA" spreadsheet contains formulae to perform a depreciation calculation for each asset. The asset custodian decides how to handle the valuation of each asset and can overwrite the "default" formulae.

At the end of the effective life, the formula may be replaced by a salvage value in the current value, if this is a significant amount.

For old assets, the current value can be estimated (if any), or the cost data needed for depreciation calculations can be estimated.

If a custodian has enough assets to warrant using a spreadsheet to calculate depreciation, they can use a copy of the "PA" spreadsheet. The simpler approach is to use a general assets spreadsheet and estimate current value each year.

Venue Deposits and other Financial Transactions

The society uses cash, not accrual, accounting. The difference between cash and accrual basis accounting has to do with the time frame in which revenues and expenses are recorded and reported. Cash basis accounting is suitable for a non-profit organisation like MFS.

Cash basis accounting is a very simple form of accounting. To take a business example, when a payment is received for the sale of goods or services, a deposit is made, and the revenue is recorded as of the date of the receipt of funds — no matter when the sale was made. Cheques are written when funds are available to pay bills, and the expense is recorded as of the cheque date — regardless of when the expense was incurred.

The primary focus is on the amount of cash in the bank, and the secondary focus is on making sure all bills are paid. Little effort is made to match revenues to the time period in which they are earned, or to match expenses to the time period in which they are incurred.

Accrual basis accounting matches revenues to the time period in which they are earned and matches expenses to the time period in which they are incurred. This would be a much more complex accounting system unlikely to be suitable for volunteer administration.

As the society uses a cash accounting basis, venue deposits are treated simply as a part of the venue cost paid in advance, and expensed at the time they are made. Thus, only fixed assets are included in the asset register, not financial transactions like pre-payments.

Content Manager: MFS Committee; Status: Confirmed by MFS Committee 24Mar15.

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