Bassetlaw District Council has met its SORP accounting requirements for its £280 million fixed assets with Real Asset Management’s Asset4000 system.
The annual Statement of Recommended Practice (SORP), which becomes mandatory from March 2009 for local authorities and many other public bodies, changes the reporting process for annual accounts. The overall objective of SORP is to fairly present the affairs of the local authority and demonstrate that it complies with proper accounting practices.
Tracey Bircumshaw, principal technical accountant, Bassetlaw District Council, said, “Our annual statement of accounts has traditionally been put together in a different way to private organisations. Local authority accounting is developing all the time as convergence with UK GAAP, and in the near future IFRS, will require changes to our accounting methods and system requirements. The annual SORP provides us with the statutory framework which ensures compliance with legislation and accounting standards.”
Nottinghamshire-based Bassetlaw chose Real Asset Management’s Asset4000 system in order to centralise and automate its fixed asset register, removing the need for outdated spreadsheets and making audits and reconciliation easier.
Bircumshaw said, “With over £280 million of fixed assets including housing, land and equipment under our control, proper management and recording of them is vitally important. These figures are a core part of our year-end reporting and accounts and now they are also central to compliance with SORP.”
One of the biggest recent changes to the SORP regulations is the introduction of a revaluation reserve for each asset. At Bassetlaw, each asset and enhancement to it is recorded on Asset4000 in detail, ensuring an accurate historic cost record. Housing and maintenance works carried out on these properties comprise over 80 per cent of Bassetlaw’s £280 million assets. Bircumshaw said, “With over 9000 fixed assets, each with its own historic cost record, we have a great deal of information that needs to be collected and collated in order to review them against their current values. It’s essential that we ensure the historic and current cost accounts are available and that each asset has a revaluation reserve.”
For many local authorities, a particularly challenging aspect of SORP compliance is ensuring that both historic cost and current cost accounting records are maintained for each individual asset. In the absence of a comprehensive asset register, this often requires a team of valuation experts to carry out a physical inspection of many of the properties.
Bircumshaw explained, “Bassetlaw bought Asset4000 to record and manage our individual fixed assets, such as land, property, equipment or anything with a value over £10,000. We set up Asset4000 to detail everything, so if an asset is enhanced, it’s all in the register. This makes it extremely simple for us to generate the necessary records in order to comply with SORP.”
With over 56,000 records stored in Asset4000, Bassetlaw has all the historical information on its housing stock to comply with the SORP regulations. These records also enable the council to produce accurate matching valuations on each of its 9000 fixed assets using existing data. Bircumshaw said, “Without Asset4000, collating this information would have been horrendously labour intensive. We changed our internal procedures to comply with SORP regulations and then used the Real Asset Management software to deliver it.”
Housing accounts for 80 per cent of the Bassetlaw asset register and the information is updated automatically by the estates valuation department; the other 20 per cent of assets are entered directly into Asset4000. Bircumshaw concluded, “At the end of the financial year, all we do is run a single report and transfer the information straight into our annual accounts.”