#voteforchangein2024 -without assets, there is no service delivery.

Assets are critical to service delivery. Do you know what assets government owns?

Without assets, there would be no services provided by government – no education, healthcare, transport, community activities, and so much more. As we go to vote for a new administration, a priority for the new government will be re-invigorating growth in our economy. Both the investment in new infrastructure and maintenance of existing infrastructure are critical to economic growth. Often, assessing what you want for the future may be based on what was received in the past. Assessing historical information about assets and how government behaved in the past is a good place to start.

So, where can you find information about government’s assets?

The financial statements of public sector entities provide historical information about financial statements. Water is front of mind at the moment, so let’s look at a Water Board’s financial statements (as they are national and provincial government entities).

What would you see in the financial statements and what does it mean?

Below is the typical information in the financial statements.

The diagram shows some of the information about assets in the financial statements. The statement of financial position (balance sheet) would give summarised information about water infrastructure for an entity; the notes provide more detailed information. The notes will also provide information about:

• Work-in-progress (WIP) – this note provides the same “reconciliation” as illustrated above for PP+E but is for assets that are being built or developed. Whether entities are able to move projects from WIP to completed assets is a measure of the efficiency of both their project and money management. An indication that there are inefficiencies or “anomalies” in a project is an entity not moving projects from WIP to completed assets (which are reflected as additions to PP+E). A ballooning WIP number, along with information about projects taking longer than expected to complete, require further analysis.

• Maintaining existing assets – while there is no specific way to calculate repairs and maintenance, there will be information in the notes about the value of repairs and maintenance for the year and how it is calculated. The percentage spend on repairs and maintenance versus the carrying value of assets at year end is often a metric used to assess if enough is being spent on maintenance. Conversely, a high level of spend on maintenance may mean that assets are being used when they may need to be replaced, or are being used at an unsustainable level.

• Geographical location of assets – depending on the entity, there may also be a “segment report” which will provide information about where assets are located.

The financial statements are one piece of a puzzle. Management will also provide information about asset management in their reports that accompany the financial statements.

Make good decisions

There is never a better time to read the financial statements and annual reports. Hold entities accountable, make good decisions, and remember to #voteforchangein2024.