8
FMI
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IGF JOURNAL
VOLUME 25, NO. 2
THE INTERNAL ATOMIC ENERGY AGENCY’S PROPERTY, PLANT AND EQUIPMENT (PP+E) LIFECYCLE FRAMEWORK
2.
Procure to Pay:
from requisition
to payment including the treasury
management functions.
3.
Asset management:
the receipt,
installation, maintenance, tracking
and disposal of assets.
4.
Accounting to Reporting:
the
proper accounting, record keeping
and reporting (internal and external)
of assets.
The four horizontal bands identify
the main parties involved in the PP+E
Framework. These are the supplier, the
corporate functions of the organization,
the program or business area, and the
executive or governance function. For
brevity and clarity, the original IAEA
model has been reconfigured slightly.
Generally, an asset will proceed in a
sequential manner from left to right
across the model.
Step 1
Business Need
and Step 2
Budget Review and Approval
• Step 1.
The need to acquire or re‑ invest in an
asset.
• Step 2.
Budgeting request and approval.
Steps 1 and 2 represent central
resourcing and funding questions within
an organization. The IAEA has both
an operating and a capital budgeting
processes. Given the specialized and
technical nature of the Agency, it
often has to consider whether to build
or buy an asset. For Public Sector
organizations, there is also a temptation
to have “Year-End Madness” at this
step; buying frenzies to soak up end of
year budget lapses.
By the completion of Step 2, an
organization knows it needs to buy or
acquire “something” and it has the
money or resources to do so.
Steps 3 – 8
Buying and Paying for the
Asset
Whether buying pens or new jet fighters,
most organizations have a procurement
process represented in Steps 3 through
to 8. The specifications of Step 2 are
refined turning the business need into
approved Step 3 requirements. Buy
decisions continue to Step 4 while build
decisions jump to Step 9.
Step 4, the vendor community bids on
supplying the asset.
Step 5, Vendors respond to the above
request. This will typically create a
Purchase Order or Contract for goods/
services. The successful vendor may
require more (or less) organizational
staff involvement than originally
anticipated. This may change the
expected Direct Attribute Costs of the
asset (more on this in Step 9).
Step(s) 6 are Finance Department
focused. We first encounter Step 6 if
a pre-payment, deposit or retainer is
required.
Step 7; the vendor provides the goods
(or services). (Author’s note, while this
may involve a capital lease from the
vendor, for brevity, this is beyond the
scope of the article).
Under IPSAS, and with Step 8, the
vendor transfers ownership of the asset to
the organization. Previously, Steps 6 and
8 were the end of the IAEA accounting
Figure 2: IAEA’s Property, Plant and Equipment Asset Lifecycle Framework
