09-25 – Land Under Roads

The Department issued Circular to Councils 09/09 Recognition of Certain Assets at Fair Value on 17 March 2009. The Department has reviewed the position on land under roads within that circular in light of comments received in relation to the Draft Local Government Code of Accounting Practice and Financial Reporting, Update 17 and comments received from New South Wales Treasury. This circular supersedes Circular 09/09 in relation to land under roads only.

The Department has now determined that in accordance with AASB 1051 Land Under Roads, a council may elect to recognise or not to recognise as an asset land under roads acquired before 1 July 2008. Land under roads acquired after that date is accounted for under AASB 116.

It is important for councils to note that land under roads is “land under roadways, and road reserves, including land under footpaths, nature strips and median strips”, (AASB 1051). Also “an asset is a resource controlled by an entity as a result of past events; and from which future economic benefits are expected to flow to the entity”, (AASB 138).

In order to decide on the option that councils should take, council staff should refer to the Australian Accounting Standards, in particular AASB 1051 and
AASB 116 as referred to above. Also, council staff may need to refer to the Roads Act 1993.

Council staff should ensure they discuss preferred actions with their auditor to make certain that they have the appropriate documentation to satisfy audit requirements.

Ross Woodward
Acting Director General