Asset Valuation Guidance
The first completed valuation for all Victorian water entities was undertaken as at 30 June 2011 and the results of the valuation were recognised in financial statements at that reporting date. Initial infrastructure asset valuation reports, provided by the independent valuer, included consumption based depreciation; however the methodology was rejected by the water entities and also not supported by the Victorian Auditor General’s Office (VAGO). The final infrastructure asset valuation was revised and provided on a Depreciated Replacement Cost (DRC) basis, which was supported by VAGO.
In accordance with Financial Reporting Directive (FRD)103F a formal valuation must be completed every five years. The current valuation for all Victorian water entities is underway and will be recognised in financial statements as at 30 June 2016.
The VicWater Financial Issues Steering Committee, (comprising Finance Managers from Melbourne Water, Barwon Water, Yarra Valley Water, Goulburn-Murray Water, Lower Murray Water, Wannon Water, South East Water, Gippsland Water and Southern Rural Water) took a proactive approach to minimise any issues with the 2016 valuation by coordinating stakeholders and providing guidance on the valuation methodology.
This collaborative industry project has included the development of asset valuation methodology and a data template for use in the 2016 Victorian water industry asset revaluation. It has also developed a template Board paper for each water corporation Board to separately consider the requirements of the FRD 103F and the fair value hierarchy in making their own determination to use the DRC approach.
Data templates as circulated in April 2015