A phone company began as a government department, later became a statutory authority and was eventually corporatised. At this point, it became liable for income tax. It obviously had billions of dollars of fixed assets, millions of asset units, and, to make things slightly more complex, these were spread over 7.7 million square kilometres. It had been running without a Fixed Asset Register for more than one hundred years. We had about two years to create a unitised Fixed Asset Register.

Leaving the complex tax issues aside, from a policy and systems perspective the task was absolutely gargantuan. Well, where exactly would you start? 

The previous group accounting method had no concept of asset units. It was focused on large broadly functional technology groupings, for example customer access network, switching, transmission and such. Assets were added, depreciation was applied, and assets were eventually written out of the books. There was little linkage with what was actually really happening with the physical underlying assets. 

We started by establishing a new asset accounting policy that recognised that depreciation needed to be linked to physical asset units. Asset unit definitions were established along with services lives. In a somewhat circular process, statistical databases were aligned to these asset unit definitions. The process was called Fixed Asset Re-analysis; using the best that we had to establish what we needed to establish. We ended up with three broad categories of Fixed Assets: 

Low volume, high value items = Actual Cost

High volume, low value items = Average Cost First In First Out (FIFO)

Cable-like assets = Average Cost of Capacity 

So, where possible, stock takes were conducted. Those items that had some form of asset register capability for example network design tracking systems, land and buildings registers were translated directly into the asset register. For all other assets, for example customer premises equipment, statistical systems were relied upon. 

The Fixed Asset Register we had, but had never implemented, was an American design and unsuited to local tax requirements. So, on top of all the activity already mentioned, we needed to build a Fixed Asset Accounting System to house and handle these records as we needed to treat them, both at the time, and to accommodate envisaged future asset treatments. 

I recall sitting next to a Navy Observer on a flight from Melbourne to Brisbane. We got talking about the work he did in helicopters and what I did “on the ground”. I was telling him the above story and, after a while, he seemed to start to nod off. Well, I thought it was something special and exciting. Something not many of us would get to do in our lifetimes. 

I have often wondered if there are other examples of circumstances where this has been undertaken?  Had anyone else been in this situation where the organisation had been running for a long time without a Fixed Asset Register? I would be very interested to hear your stories. Oh – and I promise not to nod off!


  • 2015-09-02 11:44:25
  • Mark Spicer
  • Asset Accounting, Systems Accounting, Transformative Management