It's a hot topic of discussion on the IPWEA Ask Your Mates forum: should financial statements include green assets?
Paul Handcock from City of Melville sparked the discussion with this post: "Hi we have been working through the IPWEA Practice Notes on Parks and have come up with some replacement costs for our park "green" assets, i.e. the landscaping, sporting fields, grass, trees, etc. A quick look around the annual reports of other councils does not show that these assets are recognised in the annual financial statements. There has been a lot of discussion on this topic over the years but, as far as I know, there has been no recognition in the accounting standards. Some council's do include a note to the effect that they are aware of these assets. Does anybody out there include these assets in their financial statements?"
Gracelyn Shannon from Town of Gibsons added: "The Town of Gibsons in Canada has been wrestling with similar questions as we move forward with natural asset management, which includes the management of, and reporting on, green infrastructure as you described (Parks), streams, groundwater, ponds, trees, and other natural assets that serve a civil function."
Brian Milne, Director of Xyst and experienced IPWEA trainer weighed in on the discussion. "Valuation of green assets is a particularly difficult area and full of some confused thinking – mainly the issue of valuing for environmental/social benefits, financial reporting purpose and for asset management purposes. All are different and the first step is to be clear about the purpose of your valuation and how you intend to use the information.In our experience, very few organisations are including green assets in their financial reporting (but still interested to hear from those that are doing this). Technically I believe they can be and arguably should be, but for a variety of reasons they get "conveniently" excluded.However, this doesn't prevent asset managers valuing their green assets for asset management purpose "where this will be useful" – It is this last bit that is important or there maybe no or limited benefit for the effort involved. It is useful where you want to apply a planned or scheduled approach to the replacement of green assets and require targeted renewal funding to do this work (and this may just be a selected group of green assets - typically street trees). In reality most green asset replacement/rehabilitation is dealt with effectively through routine/ongoing maintenance activities.For more information refer to IPWEA Parks Practice Note 10.2: Renewal, Valuation and Asset Management Plans where we have attempted to provide some clarity around this issue and provide practical guidance for valuation of parks assets including green assets." You can read the full discussion and join the debate here.