Asset Costing and Valuation

This item is free to Āpōpō members through our partnership with IAM.

Version 1, November 2018

Asset Management and finance are inextricably linked. Organisations which rely on assets for the delivery of products or services need to spend money on creating, caring for and ultimately disposing safely of assets. The majority of the associated asset management activities rely on good interworking between asset managers and finance professionals, essential for the achievement of corporate objectives and the delivery of value to stakeholders and to satisfy external reporting needs.

This guidance document aims to provide a bridge between the worlds of finance and asset management. Whilst the document talks about “Accounting” and “Asset Management” it does not seek to suggest that these functions exist in separate silos. The intent is merely to show how those who are responsible for different aspects of the delivery of corporate objectives depend on each other.

The guidance addresses the main processes of Asset Management and how they interact with the Accounting discipline. It provides some help regarding the meaning if key terms to help with the development of a shared language. It also provides guidance on the types of disclosure in external reporting that are possible through shared understanding and common processes.

The document does not set out to be a course in finance for asset managers, nor in Asset Management for Finance professionals. Neither does it set out to repeat guidance and sources of practice elsewhere. Where appropriate, it does indicate reference sources where the reader may find out more in particular areas.

Establishing a close link between Accounting and Asset Management delivers numerous benefits including:

• A more holistic view of the value that the organisation delivers to its stakeholders.
• Better understanding of the costs and revenue within business and the drivers for these items.
• Ensure compliance with regulators and financial accounting standards.

All of these drivers are about demonstrating and delivering a better understanding of the business and the provision of evidence to support these.