Glossary - A
The requirement by which those exercising authority are answerable for the responsibilities that have been given to them.
Recognition and recording of economic events and other transactions involving revenues, expenses, assets, liabilities and equity as they occur, rather than when a flow of cash occurs. Thus, under accrual accounting, revenues are recognized as soon as they are earned and expenses are recognized as soon as a liability is incurred, regardless of the timing of related cash inflows and outflows. Source: T3
Alternative: In accrual basis accounting, income is recorded when earned (instead of when cash is received) and expenses are recorded when incurred (instead of when cash is disbursed). Income is typically earned when the underlying goods or services have been delivered to the customer. Expense is typically incurred when the company receives the underlying goods or services purchased.
Accrual Output Budgeting
A system of budgeting that focuses on the delivery of outputs to meet the organization's priorities, within a financial framework based on full accrual accounting. Source: T3 (modified)
An expense that is incurred, but not yet paid for, during a given accounting period such as a payroll, interest or rent payment that crosses an accounting period, a portion of which reflects an actual obligation and a portion which represents an as yet unrealized obligation. Source: T4
To obtain by lawful means, except by gift or inheritance. To obtain by paying money. For an asset, acquisition includes all direct and indirect costs associated with the acquiring of the asset, including planning, engineering, design, right of way/land, site preparation, construction, and commissioning costs. Source: S2
The work performed to produce outputs and describe what activities an organization does. Source: S2 (modified)
Pleasant or comfortable conditions provided by a facility or service. Source: S2
The periodic allocation of the cost of intangible or non-physical assets (e.g. patents, research and development costs, copyrights) and natural resources (e.g. forests, national parks), representing the amount of the asset consumed during the course of that particular period of time. Source: A4
The reduction of the value of an asset by prorating its cost over a period of years. Note, the term "amortization" is typically applied to financial assets, while the term "depreciation" is applied to physical assets.
Annual Equivalent Cost
The series of uniform annual amounts which, when discounted and summed, equal the Net Present Cost of a series of non-uniform costs. Source: G3
The process by which the parties to a dispute submit their differences to the judgment of an impartial person or group appointed by mutual consent or statutory provision. An arbitration clause inserted into the contract requires that a specified procedure be followed by all parties in appointing an arbitrator. The arbitrator hears submissions from the parties to the dispute and makes an award that is final and binding. It is generally a faster and less expensive process than litigation and the court system. Source: T3
A person or agency either appointed by agreement by the parties to a contract to decide a dispute or in accordance with the dispute resolution provisions of the contract. Source: T3
Anything of value such as an area of land, or a building, or an item of plant or equipment or infrastructure that provides service potential or future economic benefits over a period greater than one year and has a cost which is not "immaterial" (typically defined as greater than, say, $1,000).
Assets are typically classified as either "financial" (cash, stocks, debt instruments), "intangible" (intellectual property, goodwill) or "physical".
Unless otherwise specified, the term "asset" as used in SIMPLE is assumed to be a physical asset. Source: A4
Asset Distress Mode
A distress, or failure, mode of an asset for which the condition, or risk of failure, of the asset might be assessed. SIMPLE recognizes four core failure or distress modes: Availability/Capacity, Performance/Level of Service, Mortality/Reliability and Economic. Source: D1
Asset Management ("AM")
A systematic approach to the procurement, maintenance, operation, rehabilitation and disposal of one or more assets. It integrates the utilization of assets and their performance with the business requirements of asset owners or users. Asset management is all about the continuous alignment of asset performance to meet service delivery outputs to deliver the desired outcomes. Source: A4
A management paradigm and a body of management practices that is applied to the entire portfolio of infrastructure assets at all levels of the organization which seeks to minimize the total cost of acquiring, operating, maintaining and renewing the organization's assets within an environment of limited resources while continuously delivering the service levels customers desire and regulators require at an acceptable level of business risk to the organization.
Asset Management Information System ("AMIS")
A computer-based software system for collecting and analyzing data, and extracting meaningful information on the performance of existing assets and their operating costs. Often called an Enterprise Asset Management System or "EAMS". Source: A4
Asset Management Plan ("AMP")
A document that identifies the short and long term service delivery requirements of the portfolio of assets belonging to an organization. It provides a framework for managing an asset, or group of assets, from within the asset portfolio. Source: S2 (modified)
Asset Management Strategy
A preferred strategy outlining the minimum acceptable asset performance criteria needed to support service delivery including resource levels for human, fiscal and IT for the required functionality. Source: A4
The measurement of the achievement of pre-determined outputs arising from the existence and operation of assets using a range of performance targets that measure the individual and collective contribution an asset makes towards service delivery and/or business outputs. Source: L1
A systematic record of assets and their attributes. The asset register provides information for strategic planning and operational management by asset custodians including physical (condition) details, financial details, asset performance and service delivery performance indicators and targets. Source: L1
Asset Register - Hierarchical Structure
A structure for an asset register - typically a tree or pyramid structure - which allows aggregation of data from the lowest level up to the highest, for useful and appropriate reporting.
Work performed on an existing asset to ensure that it's performance capacity and capability meets its pre-determined performance target. It does not refer to work that transforms the asset to an "as new" condition. Painting a school classroom and replacing its floor covering, replacing x-ray equipment in a hospital, milling and repaving a section of road all fall within this category. Source: A4
The replacement or reconstruction of an existing asset with a new asset. The distinction here is that the resultant asset is transformed to an "as new" condition. Demolishing and rebuilding new classrooms or a hospital ward fall within this category. Source: A4
Renewal itself is comprised of the following:
- Repair - normal periodic maintenance, minor in nature, anticipated in the normal operation of the asset; no enhancement of capabilities
- Refurbish/Rehabilitation- replacement of a component part or parts or equivalent intervention sufficient to return the asset to level of performance above minimum acceptable level; may include minor enhancement of capabilities; typically funded out of capital budgets
- Without enhancement - substitution of an entire asset with a new or equivalent asset without enhancement of capabilities
- With enhancement - substitution of an entire asset with a new or equivalent asset with enhanced capabilities
Maintaining a majority of the existing asset, while transforming its appearance and functionality to "as new", and in some instances, "better than as new".
Restoring heritage assets is a good example of this terminology. While great care may have been exercised to restore the asset to its original new condition, use of modern materials will enhance its anticipated life prior to the need for further new works.
Widening the shoulders of an existing road, for safety reasons, provides another good example - the existing pavement remains untouched (same bottom and top courses and pavement), but the road shoulders are extended in width and paved by say 1.5m to enhance driver safety. Source: A4
Asset Review and Analysis
A structured and systematic process that involves the identification, collection and analysis of relevant data for the purpose of assessing the performance of an asset portfolio. Particular emphasis is given to physical, financial and operational planning issues. Source: L1
Asset Strategic Planning
The process of developing management strategies that will contribute to the best utilization of assets in the delivery of services to the community in line with corporate plans and service delivery strategies, and that will ensure ongoing compatibility between the composition of an asset portfolio and the changing environment within which it operates. Source: L1
A measure of how effectively and efficiently an asset is being used to meet service delivery. Source: G1 (modified)
Asset Valuation - Condition Based Value
The current value of the asset, generally measured as the replacement cost less the monetary value associated with the actual deterioration of its condition. Source: T3
Asset Valuation - Current Cost
The cost of an asset measured by reference to the lowest cost at which the gross future economic benefits embodied in the asset could currently be obtained in the normal course of business. Source: T3
Asset Valuation - Current Market Value
The amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm's length transaction. Source: T3
Asset Valuation - Current Replacement Cost
The cost of the future economic benefits expected to be derived from use of the asset, estimated as the current cost of the future economic benefits of the most appropriate replacement facility. Source: T3
Asset Valuation - Current Reproduction Cost
The current cost of reproducing (replicating) the asset in terms of both scale and technology. Source: T3
Asset Valuation - Current Value
The value of an asset at the present time. It may be estimated from the current market value or where the market is deficient, by other methods such as depreciated value using current cost accounting. Source: T3
Asset Valuation - Deprival Value
The direct and indirect loss which might be incurred by an organization if it were deprived of an asset; it assumes replacement of that which needs to be replaced rather than that which presently exists, hence factoring in current utilization of the asset. Source: T3
Asset Valuation - Disposal Value
See "Net Market Value" below.
Asset Valuation - Insurance Value
The value on which insurance premiums are based. Source: T3
Asset Valuation - Net Market Value
The amount that could be expected to be received from the disposal of an asset in an orderly market after deducting costs expected to be incurred when realizing the proceeds of the disposal. Source: T3
Asset Valuation - Residual Value
The net amount expected to be recovered on disposal of a depreciable asset at the end of its useful life. Source: T3
The examination of random samples of work processes to gain objective evidence that the organization's documented processes are being observed. Source: A4
A systematic examination of financial statements with the objective of expressing an opinion on the fairness with which the statements present the financial position and results of operations. Source: S2
Assessment of practices and procedures to ensure efficient operation, probity and conformity with corporate policy. Source: A6