Disposal of Assets

10.3	Introduction University owned assets that are considered surplus to requirements or are beyond economical repair will be disposed of in accordance with the following procedures. These principles and procedures need to be read in conjunction with the Policy on Research Grant and Equipment Transfers.
	Principles Assets that are surplus to the requirements of the University must be disposed of in a manner that achieves the net maximum benefit to the University. Disposal of assets must be conducted with probity. Cost Centre Managers are authorised to dispose of assets under their control. Cost Centre Managers are responsible for ensuring compliance with this procedure. Sale proceeds return to the cost centre that is responsible for the asset. Definitions
	Net maximum benefits are determined by the proceeds from disposal less all costs associated with the disposal. Proceeds are normally financial benefits but may include other benefits (eg donation of surplus assets to a school may provide goodwill to the University). Costs include direct selling costs eg advertising as well as indirect costs such as the cost of staff time involved in the disposal. Probity means the process must have integrity. The acid test is "would a reasonable person, in possession of all relevant facts, agree that the action taken was reasonable". Conflicts of interest must be avoided if possible. If not possible, then conflicts of interest must be disclosed in writing, and the person with the conflict of interest must not be involved in decision making. Demonstration of probity requires documentation of key information. Cost Centre Manager is the person who is financially responsible for managing the cost centre. For the purpose of this procedure it includes: Faculty Heads Head of an Academic Organisational Unit/Sub Unit/Institute Executive Director of Administration Heads of Division in Central Administration University Librarian Director of the National Tidal Facility Procedures In accordance with 10.1 Assets Register Additions assets with an original acquisition value of $10,000 or more are recorded in the University's asset register and are included in the University's balance sheet. These records are held centrally and disposal of assets must be recorded on the assets system. Items below $10,000 are not recorded on the central assets register and so there is no central reporting requirement.
	10.3.1 Preparation for Disposal 10.3.1.1 Valuation Cost Centre Managers must determine a value for the item to be disposed and document this. Methods of valuation may include reference to classified advertisements for commonly traded items eg vehicles and computers, and formal valuations. Formal valuations are more likely to be of benefit where items are of a current value greater than $10,000 and the existing value is difficult to determine eg art works, specialised equipment. 10.3.1.2 Data All data stored in a University asset must be removed. This includes documents in filing cabinets as well as information stored electronically eg in computers. The clean up process must remove the data. In a computer the hard disk should be reformatted as simply deleting files does not actually remove them from the hard drive. There are software tools that can recreate deleted data. If the data stored on the computer is particularly sensitive, advice should be sought from the Information Services Division. 10.3.1.3 Due Care The University will not knowingly dispose of an item that is unsafe. Cost Centres should take reasonable steps to ensure the item sold is safe. However the University will not warrant that items are safe. 10.3.2 Disposal Process Surplus assets may be disposed of by any method that will provide net maximum benefit to the University whilst maintaining probity. Methods may include: Trade in Sale by private treaty Auction/Tender Donation Assets with no net economic value may be scrapped.
	10.3.2.1 Guidelines for Disposal by Sale Should the expected sale price be $2,000 or less the Cost Centre Manager will determine the appropriate method of sale. Should the expected sale price be greater than $2,000 but not more than $5,000, the Cost Centre Manager will arrange for: (a) an entry to be placed in an official circulated University publication, advertising the asset for sale at a fixed price, not less than any trade-in price. Sale of the asset will be on a first come first served basis; or (b) the asset to be offered for sale by tender/auction. In either case, the Cost Centre Manager may also arrange for the item to be advertised for sale in a newspaper, trade journal or on the Internet. Should the expected sale price be greater than $5,000, the Cost Centre Manager will arrange for the asset to be offered for sale by tender. This will involve at least one notice being placed in a circulated formal University publication and, it may also involve notice being placed in the Advertiser or a trade journal, depending on the nature of the asset in question. Alternatively assets may be provided to an auctioneer for sale by auction. 10.3.2.2 Warranties Items are to be sold on an "as is" basis with no warranty or guarantee. This should be included in the documentation for the sale. 10.3.2.3 Disposal to University Staff Disposal of surplus equipment to University staff may cause a conflict of interest, but may provide the maximum net benefit to the University. In this case, the relevant Cost Centre Manager must ensure that the price charged is fair and reasonable and document the basis for this. Staff may not approve the sale of items to themselves. Any retired equipment sold to staff and/or associates below the current market value will give rise to a FBT liability. Selling equipment at a discount is providing employees with a fringe benefit. If equipment is sold to staff below 75% of the purchase price it is GST-free and providing it is sold at the current market value then no FBT is payable. 10.3.2.4 Sales Contract A written record of the sale should be prepared and signed by the University and the purchaser/donee unless this is impractical. The documentation must include: the names of the parties to the contract; the sale price; a description of the items including serial number and other identifying symbols; that there is no warranty; title to the items does not pass until the sale proceeds have been paid eg cheques have been cleared. Unless otherwise agreed, removal of the asset shall be at the purchaser's expense. The time and place for the removal of the asset will be specified by the University. A sample sale document is appended. Cost Centre Managers may use this or another contract provided it meets the above requirements. In some limited circumstances a sales contract will not be appropriate. For example where multiple items of low value are sold to multiple purchasers, the cost of preparing sales contracts may outweigh the benefit. Disposal of surplus Library materials is specifically exempted from requiring a sales contract. Other exemptions may be approved by the Director, Financial Services. 10.3.2.5 Payment Method Payment should normally be made by cash or bank cheque. Payment by cash should be made through the Cashier's Office. Payment by credit card or EFTPOS may be made through the University Cashiers' Office and a receipt will be provided for payment. Payment by personal cheque should be avoided unless the risk of the cheque not being honoured is judged to be low. For amounts of $5000 or more, personal cheques will not be accepted. Payment must be received prior to the item being handed to the purchaser. 10.3.3 Accounting Requirements Assets with an original acquisition value of $10,000 or more: Cost Centre Managers are responsible for the following: preparation of the "Asset Retirement Form" Form 001 forward the Asset Retirement Form and receipts to Assets Officer, Financial Administration, through the local area Assets Officer. Financial Services Division is responsible for: reviewing the disposal process removing the asset from the Assets Register ensuring the integrity between the General Ledger and Assets Register For assets with an acquisition value of less than $10,000, Cost Centre Managers are responsible for update of their asset register, if one is used. All proceeds received from the disposal of assets are returned to the cost centre holding the asset. Revenue should be recorded using account code 0802 Asset Sales. 10.3.3.1 Preparing the disposal form The Assets Retirement Form must be completed by the Cost Centre Manager, ensuring that all details pertaining to the disposal of the asset are entered on the retirement form 001. This includes: asset tag number description of asset method of disposal, eg. sold, transferred to another department. 10.3.3.2 Accounting for Trade ins Where items are traded in for new acquisitions, the respective disposals and acquisitions shall be treated as separate transactions. The University's accounts shall reflect the cost of assets acquired before trade-in as gross capital expenditure, and net profit/loss on disposals as abnormal income/expenditure. 10.3.4 Taxation Requirements As a registered charitable institution, the supply of second hand goods by the University is GST free if the selling price is either: Less than 50% of the GST inclusive market value OR Less than 75% of the acquisition cost inclusive of GST (Reference: "A New Tax System (Goods & Services Tax) Act 1999, Division 38-250 (1) (b) (ii) & (2) (b) (ii)) If the above requirements are met there is no need to provide the purchaser with a tax invoice. If the above requirements are not met, GST will apply at the rate of 10% and a tax invoice is required. This can be arranged with the Debtors Clerk in the Financial Services Division. ------------------------------------------------------------------------------------ SALES CONTRACT between FLINDERS UNIVERSITY ABN 65 542 596 20 (Seller) and Purchaser ABN for the Sale of (description of items to be sold including serial number(s) and other identifying symbols) Price: XXX INTENT 1. XXX and Flinders University (FU) are entering into this Agreement for the sale of the above item(s). TERMS AND CONDITIONS 1. The items being sold are those as registered above. 2. The sale price is listed above. 3. Purchased on an as it stands basis. 4. There is no warranty or guarantee on the items(s) listed above. 5. Title to the item(s) does not pass until payment has been made and the seller has received the proceeds. In the case of payment by cheque this shall mean the date on which the cheque is cleared. SIGNED: On behalf of Name of Buyer by ............................................ Date ...................... ............................................ (title) On behalf of Flinders University by ............................................ Date ...................... ............................................ (title)