Customer :
A Mining Company in the African continent.
Business Requirement :
The Company being in the Mining Sector as part of its flagship project in the Northern Cape Province of South Africa had identified a Zinc Mine (Open Pit Mine).
Capitalization of Fixed Assets in accordance with IFRS.
Physical Verification of Fixed Assets capitalized.
Establishing Accountability and Ownership of assets.
Tagging of Assets physically verified.
Identified Process Challenges :
Understanding of the various phases of the Project lifecycle, Identifying the various standards applicable as per IFRS for the Entity, Identifying the assets emanating from the contract in line with BOQ, Identification of Direct cost and Indirect Cost (Enablers) for the Project, Determining the Ownership of the assets for the various contracts, Identification of the Capitalization Trigger Points, Componentization of Assets in line with the principles of IFRS, Physical verification and tagging of assets, Determining the Depreciation Key and Useful life of assets before configuring in SAP. .
Approach and Solution Design :
Identified the Project lifecycle and various standards applicable at each stage in line with the principles of IFRS, Identified the Capitalization trigger points for the project for each phase being Mining Assets , Non-Mining Assets based on the technical achievements, Reviewed the Contracts and BOQ entered by the Entity and identified the possible assets emanating from the contract by having discussions with the user.
The Project Capitalization was performed in a Phased Manner as under:
Mining Assets, Non-Mining Assets once being identified as put to use, Non-Mining Assets being the Concentrator Plant by considering the enabling costs
Determined the accounting treatment and ensured capitalization is as per the principles of IFRS for certain specific scenarios mentioned as under:
Insurance Spares, Borrowing Costs, Pre-Operative Expenses, Pre-Operative Revenue, Exploration and Feasibility Costs.
Established the parent child relationship for the assets identified and ensured the assets are considered for componentization, Performed physical verification of assets and obtained user sign offs to ensure ownership for the assets is established.
Business Benefit and Result :
Delivered a comprehensive FAR (Excel) being in line with the requirements of IFRS, Ensured the FAR developed in excel is uploaded into SAP by defining the Depreciation Key , Useful Life and other mandatory fields as required, Delivered a physical verification report to the entity.
