Public sector asset valuation
Aligning asset management and the valuation of public sector assets for financial reporting Kerry Stewart and Rex Harland Unfortunately, and as a consequence of the global financial crisis, we have seen an increase in New Zealand’s public debt levels and not surprisingly a decrease in public spending. With the public sector being such a significant part of our economy, constraints on public spending are obviously necessary to help with a possible return to surplus. The government very clearly expects the public sector to become more efficient and effective to achieve sustainable and improved profitability. With the state sector having assets worth in excess of $220 billion, and half of these comprising physical assets, it is no surprise to see that a major focus is on infrastructure and asset management. With this focus, and in the area of valuing and depreciating public sector assets, it is vital that valuers, asset managers, finance managers and auditors work together as a multi-disciplinary team.
What guides the valuation process? There are a number of guidelines and standards representing asset management, finance and valuation. The valuer must be aware of these in order to get results that not only reflect fair value, but also the required service levels for that asset, assuming its continued use by the community. From a financial reporting perspective, public sector entities must meet New Zealand generally accepted accounting practice and comply with approved financial reporting standards. 8 Property Quarterly Vol 2, Issue 1, March 2012