Depreciation Expense for Elected Members

Synopsis

Depreciation expense reflects one of the costs of providing local government services and accounts for around 20-25 per cent of the average local government operating budget. It is linked to the measurement of the financial performance of your council.

The following are issues that should guide discussion to inform non-practitioner participants (generally those who are not accounting professionals) about the concept of depreciation expense in a local government context.

Course Topics

• Depreciation expense – an accounting perspective.
• Relevance of depreciation expense for a local government.
• Robust calculation of depreciation expense informs a local government of the cost-of-services provided to the community and hence supports financial sustainability
• Formula used and inputs required to calculate depreciation expense
• Asset values and useful lives are the important determinants of robust depreciation expense calculation
• Complexity of calculation increases when applied to long-life infrastructure assets such as roads, water treatment plants, waste-water facilities and storm
• water assets
• Asset Management Plans (AMPs) and engineering experience essential to determination of asset values and useful lives of long-life assets when
• calculating depreciation expense
• Asset valuation methodologies – particularly for long-life assets.
• Regular asset revaluations drive increases in depreciation expense
• Strategies to manage the impacts of depreciation expense.

The Trainer

David Mullins has an extensive background in banking and finance.  He worked in various roles in general and private client banking early in his career.

For the last 20 years, prior to retiring from full time employment, David worked for a Queensland State Government authority that provides lending, investment and financial advice to the Queensland State government, its agencies, and statutory bodies. 

In this role David gained an extensive understanding of financial governance, financial sustainability and risk management relating to Queensland local governments.