CPPM Policy Chapter 8: Asset Management
This Core Policy and Procedures Manual chapter covers general information on the management and safeguarding of assets, including policy on inventory, tangible capital assets and other assets, loss reporting, equity investments and performance bonding.
- 8.0 Asset Management
- effectively manage and safeguard government assets
- ensure that asset purchases and disposals are properly authorized and carried out in accordance with core policy, legislation and regulations
- maintain accurate and timely asset information for decision-making and reporting purposes
- encourage efficient and economic use of government assets
Government assets include:
- financial assets include public monies, accounts receivable, inventories for resale or investments that are normally non-capitalized,
- tangible capital assets and property include such things as buildings, computer hardware and software, transportation equipment, highway infrastructure and Crown land, and
- non-capitalized/expendable assets including inventories for consumption and other assets not capitalized as tangible capital assets and property such as hand-held devices, and the information stored on a medium with information capacity such as magnetic tape, magnetic disks, optical disks, hard drives, jump drives, memory cards, etc.
Statutory authority for the management and control of government assets is set out in the Financial Administration Act. The Act holds ministers and deputy ministers accountable for government assets.
See CPPM 20, Loss Management, for information on identifying and reporting asset loss.
Roles and Responsibilities
- Treasury Board is responsible for policy governing the management, custody and control of government assets.
- Each ministry is responsible for the administration, control, proper accounting and safeguarding of government assets coming under its custody or control.
- Shared Services BC (SSBC), Ministry of Citizens' Services, integrates the delivery of goods and services to provide innovative, responsive and cost-effective services to the public sector. SSBC supports government as the lead agency for procuring and supplying the technology, accommodation, products and services required by government and the broader public sector. SSBC is also responsible for ensuring that disposals are in accordance with legislation, core policy and trade agreements.
- The Procurement Governance Office is responsible for the development, communication, interpretation, monitoring and compliance reporting of corporate procurement policy, as well as management of a vendor complaint review process, and provision of support and advice to ministries (including training).
- Ministry of Agriculture is responsible for the management, development and marketing of the majority of Crown land uses.
An asset life-cycle covers all phases of an asset's life starting with planning, through its acquisition, operation and maintenance, and disposal. Management of these phases should align with government's planning, budgeting, monitoring and reporting processes. Also see Capital Asset Management Framework (PDF) for guidance.
- The planning phase deals with planning for assets needed to provide public services for achieving a variety of social and economic goals.
- The acquisition phase deals with the purchase, construction or development of new assets.
- The operation and maintenance phase deals with the operation of the assets, maintenance, betterment, amortization and impairment. This phase includes capital and expense costs.
- The disposal phase deals with disposal costs, and specific requirements for disposing the assets.
Inventory consists of:
- Items in stores or held in stock that will be consumed in ministry operations or held for resale.
- Material and supplies that are held for issue at a later date.
- Surplus real property held for resale.
Inventory needs to be safeguarded from the point of purchase, to the receipt of goods through to usage. Procedures to account for and safeguard inventories until disposed or consumed can vary, depending on dollar values, quantities and attractiveness. Control over inventories should be established whenever the benefits of additional information or incremental control outweigh the associated implementation costs.
- Ministries must establish appropriate control systems for the effective management, control and reporting of inventory, and ensure that processes are clearly communicated to staff.
- Ministries must ensure that inventory items purchased can be subsequently accounted for. Inventories must be adequately protected and safeguarded from unauthorized personnel.
- Inventories must be physically verified at least once a year. Significant differences from accounting records must be investigated and corrective action taken. A report of inventory losses must be filed (see CPPM L, Loss Reporting), as appropriate.
- Ministries must review at least annually the adequacy of inventory levels on hand. If there is a surplus and supplies are no longer required, ministries must notify SSBC for transfer and reuse elsewhere.
- Ministries must maintain a current inventory of real property on hand (i.e. land, buildings) and surplus real property held for resale.
- Ministries must not dispose of damaged or obsolete items without authority of SSBC. Disposal of inventory must be by SSBC (unless authority has been specifically delegated to a ministry for that purpose). With adequate notice, the Asset Investment Recovery Branch, SSBC, will fund the cost of transporting supplies or assets for disposal or reuse.
- Disposal of inventory must be by SSBC (unless authority has been specifically delegated to a ministry for that purpose). With adequate notice, the Asset Investment Recovery Branch, SSBC, will fund the cost of transporting supplies or assets for disposal or reuse.
- Disposal of surplus real property held for resale is performed by the ministry that has the authority to dispose of surplus real property held for resale and will use the following diligent processes to ensure realization of best value for government:
- Utilization of marketing practices to maximize competition so as to optimize proceeds of sale.
- A coordinated strategy to address sales of multiple properties to maximize returns. The best strategy will depend upon the circumstance but could range from consolidation to sub-division and phasing, depending upon the properties and market conditions.
- Transparent and equitable processes to ensure the integrity of all disposition activities.
- Consider applicable legislation, policies and guidelines such as First Nations consultation.
See SSBC Inventory Policy for Real Property (for CRF)
Tangible Capital Assets (TCAs) are non-financial assets with physical substance that are acquired, constructed, or developed for new or existing non-financial assets and held generally for use in the production or supply of goods and/or services. These assets have different useful lives extending beyond an accounting period which are classified into different asset categories. They include land, highways, buildings, automobiles, computer hardware and software, but exclude inventories, Crown land and assets purchased by third parties or by capital grants issued by the Province.
Other Assets consist of all government assets (other than TCAs, public monies, accounts receivable, inventories for consumption or resale, or investments) that are normally non-capitalized, expendable public property and include the information stored on a medium with information capacity.
- Tangible Capital Assets and applicable Other Assets must be:
- purchased through Shared Services BC, unless purchasing authority has been specifically delegated to a ministry (see chapter 6.3); and
- properly recorded or accounted for in the ministry accounting records.
- Ministries must implement adequate safeguarding techniques for government assets commensurate with the asset value and attractiveness. TCAs must be physically verified at least annually, any significant discrepancies investigated and any losses reported in line with CPPM L, Loss Reporting.
- Ministries are responsible for the protection of material assets. Attractive material assets include easily removed and sold articles and equipment. Ministry policies must require the identification of attractive assets, their location, and the type of safeguards to be applied and the name of the custodian responsible for their safekeeping.
- Information stored on a medium with information capacity must be evaluated and categorized for sensitivity/confidentiality in accordance with the Security Standards and Guidelines (PDF) (government access only). Reasonable safeguards and security measures must be in place to adequately protect the information commensurate with its value and sensitivity.
- Safeguard processes and control requirements must be clearly communicated to the responsible asset and information custodian. Assets should not be removed from government property or from assigned custodial areas without proper authorization. Ministry policies must include a procedure for the movement of assets.
- The disposal or transfer of Tangible Capital Assets and applicable Other Assets must be done in accordance with 6.3.4(d) Disposal of Surplus Assets.
- Tangible capital assets that are identified as surplus properties held for resale purposes must be reclassified as properties for resale, and recorded or accounted for in the ministry accounting records in accordance with CPPM I.6.
- Tangible capital assets that have been reclassified as properties for resale that are still in use are required to continue to amortize and expense monthly until disposition. See CPPM I.6.
- The disposal of a medium with information capacity must be done in a manner to protect the stored information in accordance with information and records disposal policy:
- Chapter 12.3.2 Destruction of Records and the Recorded Information Management Manual; and
- Chapter 15 Security and the Security Standards and Guidelines (DOC) (government access only).
An appropriate signing officer must authorize the disposal (or trade-in) of a government asset.
Equity investments by government are generally restricted to investments that provide some measure of financial support to commercial or quasi-commercial business entities consistent with fulfilling government objectives. Equity investments by government have also occurred as the result of the settlement of a business entity's financial affairs where a government guarantee was called and the equity and assets are turned over to the government. An equity investment can also arise when a loan made by government is converted or exchanged for shares in the business entity that received the loan.
- The policies in this section apply regardless of whether the equity investment is the purchase of a controlling interest in a business entity (thus determining its status as a government corporation) or the purchase of a minority interest.
- Where legislation permits the making of an equity investment, the ministry responsible must develop the program policy and criteria that determine when an investment can be made.
- Approval requirements for equity investments are summarized as follows:
|Program Minister||Minister of Finance||TreasuryBoard||Lieutenant Governor in Council|
|Directive to make equity investments under legislation||X||X|
|Program policy and criteria for making an equity Investment||X||X||X|
|Conversion of a government loan to an equity investment||X||X||X|
|A guarantee in respect of the government and the invested entity||X||
|Dilution of the government's equity (shareholdings) in the invested entity||X||X|
|Disposal of the equity investment||X||X|
|If agreement with invested entity does NOT impose conditions and protective restrictions (see policy 4)||X||X|
- The terms of an equity investment generally include restrictions on the invested entity, which are written as an agreement between the government and the entity. All agreements entered into with respect to the purchase of equity investments require, as a minimum, that:
- proper accounting books and records be maintained by the invested entity;
- audited financial statements of the invested entity are provided to the ministry at least annually. Copies of audited statements must be submitted to the Office of the Comptroller General;
- the equity in the invested entity must not be diluted without the prior written authorization of the appropriate minister and the approval of Treasury Board; and
- the invested entity may not acquire or dispose of assets nor assume any new debt obligations without the prior authorization of the appropriate minister or deputy minister. An exemption to a maximum of $100,000 may be specifically provided for in the agreement so as not to unduly hamper the operations of the entity.
- The invested entity may be restricted in the payment of management and employee bonuses, dividends, stock dividends and similar items until debt has been reduced to a prescribed level or until certain profit targets are met. Modification to the above requirements may be made in the case of minor equity investments, but avoidance of any obligation requires the prior approval of the Minister of Finance.
- Equity investments must be properly accounted for and reported according to government accounting policies. Equity investment files must include agreements between the government and the investee, the latest financial reports and permanent information of the investee, terms and conditions of ownership, changes in shareholdings and percentage ownership since initial purchase and, where required, approval of the Lieutenant Governor in Council.
- The Consolidated Revenue Fund (including approved revolving funds) must be credited with dividends (revenue) received from the invested entity and with full or partial repayments of the investment. All repayments are recorded as repayment of an asset.
- Ministries must determine the book value of equity investments at least annually. The ministry must report to the Minister of Finance if the book values of equity investments have materially decreased from their original cost.
- The accounting policies of an invested business entity that is controlled by the Province must be referred to the Office of the Comptroller General to review and determine if any differences in accounting policies require accounting adjustments when the government reports its equity investments.
- The security instrument bestowing title in the Province of its percentage share in the invested business entity must be deposited for safekeeping with the Debt Management Branch, Ministry of Finance. The ministry's chief financial officer must retain copies of these documents at the time the investments are made.
Individuals or organizations holding licenses or other statutory privileges may be required by statute to post a performance bond (security or other financial guarantee) to safeguard the government when doing business with it. The Bonding Act, other statutes and, in some instances, government agreements require persons or companies to post performance bonds or other security with the government to:
- guarantee the performance of future acts;
- ensure the financial security of the government; and
- safeguard the interests of individuals doing business with persons or companies holding licenses or other statutory privileges.
A performance or surety bond is used extensively in construction contracts and in licensees providing services to the public. The surety company agrees to pay to the government if a contractor fails to fulfill an obligation. The contractor brings the bond into force by the payment of a fee to the surety and the surety's maximum liability is the amount specified in the surety bond.
A financial guarantee may also be in the form of a security deposit, the value of which is intended to provide redress in the event of non-performance.