Transfer of non-financial physical assets between portfolio entities and the department

Issued 1 July 2013, reviewed 1 July 2016

Overview

There will be circumstances where a portfolio entity, as a result of an administrative arrangement, declares certain non-financial assets to be surplus to their requirements. This may or may not involve the physical relocation of the service(s). Any surplus equipment of a public hospital or health service should be sold and the proceeds retained by the entity, unless they are transferred to another public hospital or health service. Where the assets are transferred to another public hospital or health service due to the transfer of a service, the assets are to be transferred free of charge. Find more information in Transfer of non-financial physical assets between public hospitals.

Application and scope

This policy applies to equipment and both crown land and land where the title is held by the Department of Health and Human Services and to all associated buildings on that land.

Policy

The transfer of non-financial physical assets from a portfolio entity to the department is to be a non-cash transaction and may only be accounted for in accordance with Financial Reporting Direction FRD119A Transfers through contributed capital issued by the Department of Treasury and Finance.

Guidance note

Land and buildings surplus to operating requirements must be 'returned' to the State (that is, the department on behalf of the State). The land surplus at a public hospital or health service will normally arise from either the redevelopment of infrastructure or from changes made to service delivery models. The assets returned, often represent a return of contribution (return of capital) to the owner. Accordingly the equity is adjusted to account for this return. From the department’s perspective, the return is also accounted for through equity. On a consolidated portfolio basis therefore, there is no change in equity.

Transfer of non-financial physical assets between public hospitals

Issued 1 July 2013, reviewed 1 July 2016

Overview

There will be circumstances where a service or services provided by one public hospital are transferred to another public hospital, and this may or may not involve the physical relocation of the service(s). This policy applies where non-financial physical assets are to be transferred.

Application and scope

Non-financial assets include items such as plant, medical equipment and furniture.

The transfer of non-financial physical assets from one health service to another is to be a non-cash transaction and may be accounted for in one of two ways:

  • transfer through contributed capital
  • transfer through income and expense.

Policy

The transfer of non-financial physical assets from one public hospital or health service to another is to be a non-cash transaction and may only be accounted for in accordance with Financial Reporting Direction FRD119A Contributed capital issued by the Department of Treasury and Finance.

Guidance note

Transfer through income and expense

If the transfer is not to be adjusted through equity in the balance sheet it is to be accounted for as income and expense. The transfer is to be booked as asset(s) provided free of charge in the transferor’s accounts and as asset(s) received free of charge in the transferee’s accounts.

The department’s policy position is that no cash should change hands or be offset against any other related transaction. This is because the assets to be transferred (at carrying value) are publicly purchased and owned assets and are within the health and human services portfolio.