classification of expenditure - lasa national
TRANSCRIPT
LASA Aged Care LeadersProfessional Development Program
7th February, 2018
Classification of expenditure
Budget Components
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Resident Funded
Fortnightly Fee
General Service Fund
Maintenance Reserve Fund
Capital Replacement Fund
Resident Funded
Company Funded
General Services Fund (GSF)
General Services Fund (GSF)
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Captures expenses on items such as:
– Administration
– Salaries & Wages
– Gardening & Grounds
– Rates
– Insurance
Some GSF items may not be increased by more than CPI over the prior year’s budget
Surpluses and deficits from prior years are to be taken into account when setting the next year’s budget
Village Operator should not make a profit from the GSF expense items
Designed to be “break even” – expenses should match income from fees
General Services Fund (GSF)
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Section 106 Items: Audit Fees Bank Charges Cleaning Electricity & Gas Printing & Stationery
Section 107 Items: Insurance Council Rates Water Rates Salaries & Wages MRF Contributions
The GSF expenses are divided by the Retirement Villages Act 1999 into “Section 106” items and “Section 107” items:
Within Management Control (CPI Limited)
No Management Control
MaintenanceReserve Fund (MRF)
Maintenance Reserve Fund (MRF)
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Fund designed to maintain the Village’s capital items
Captures expenses on items such as:
Repairs and maintenance
Contracted services such as Fire, Safety and Pest Control
External Painting
Budget takes into account a Quantity Surveyor’s report that is updated annually
Any surpluses remain in the MRF fund for the future years
No restrictions on annual increases
Capital Replacement Fund (CRF)
Capital Replacement Fund (CRF)
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Fund is designed to REPLACE the Village’s capital items such as:
Vehicles
Hot Water Systems
Unit Refurbishments
Budget takes into account a Quantity Surveyor’s report that is updated annually
Funded by the village operator
Classification of expenditure
Classification of expenditure
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General Services (GSC) Maintenance Reserve (MRF) Capital Replacement (CRF) Capital Improvement
Definition Recurrent and routine in nature The upkeep of a capital item owned by the village to keep it in good condition and working order
Restoring an item to a state in which it can function efficiently without changing its character, which may include restoration to its former appearance, state or condition
Work done to make good damage or deterioration that has occurred by ordinary wear and tear, accidental or deliberate damage, or weathering over time
Substitution of the same type of item with an equivalent item
Changes and substantially improvesthe functionality of the asset as a whole
Frequency Regular: more than four times per year
Occasionally, annual or twice yearly Long term and irregularBenefit to be derived over several years
Long term and irregular
Part Vs Whole Replacement of a part, not the whole unit
Replaces the asset as a whole
Materials Lower end of value, eg, <$100 or <$300
Where new improved materials are used because old materials are unavailable – remains a repair
Change of materials that improves the value and function of the asset
Other Includes reinstatement costs if Scheme Operator is responsibleIncludes installation costs
Replacement of items (not recoverable from resident) when refurbishing the unit
Method of financing (ie, vehicle lease) does not alter the nature of spend
Where a newly-acquired item must have work done on it before it can properly function is an improvement
Refurbishment to a unit which alters or upgrades it from its original condition
Paid From GSC Bank Account MRF Bank Account CRF Bank Account Scheme Operator Bank Account (unless residents have specifically asked for it and agreed to pay for it)
Examples
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A new extension to the Community facilities to increase the floor space for resident functions.
A replacement office chair to meet OHS requirements for the manager who is new to theorganisation?
The six monthly Fire alarm testing for the Community Centre?
The council rates on the village Community Centre?
Snake being removed from common property after winter hibernation
Carpet cleaning of the Community Centre on an annual basis.
Replacement bus for use in the Village?
Roof Tile replacement on an ILU after a storm allowing water into the property.
Training expense for village manager on how to understand financial information in the Village?
The kitchen refurbishment in a vacant unit prior to the resale?
The kitchen refurbishment in an occupied unit requested by the resident?
Capex
CRF
MRF
GSC
MRF
MRF
CRF
MRF/CRF
GSC
CRF
Resident
Questions?