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Dear Sir,
Pursuant to the contract signed on 11th September 2017 , we have completed the data collection
software according to the guidance of the office of Directorate of Security & Investment of
BPDB as listed under Lot- A.2 of Package-A, We are now pleased to place the draft report under
the following sections:
Section-01 Introduction
Section-02 Scope of the services
Section-03 General Rule of Data Collection
Section-04 Basic definition and concept of valuation
Section-05 Source of Information and Methodology
Section-06 Valuation Procedure;
Section-07 Summary of the Report of Assets
Section-08 Synopsis of the Assets
Section-09 Comments, Opinions and Suggestions
Section-10 Conclusion Remarks
It is mentioned here that the information contains in this report under section 1 to 10 shall
collectively be treated as a full-fledged report of Fixed Assets of the Directorate of Security &
Investment of BPDB as listed under Lot- A.2 of Package-A.
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Draft Report on consultancy services for identification, physical verification, valuation,
recording and reporting of Fixed Assets of the office of Directorate of Security &
Investment of BPDB as listed under Lot- A.2 of Package-A.
Section-01: Introduction
1.1 Introduction:
Bangladesh Power Development Board is the biggest government owned organization, its capital
incentive and employment generation in power sector. The BPDB is responsible for major portion
of generation and distribution of electricity mainly in urban areas except Dhaka and West Zone of
the country. The Board is under the Power Division of the Ministry of Power, Energy and Mineral
Resources, Government of Bangladesh.
BPDB has taken a massive expansion plan to add about 11600 MW Generation capacities in next
5 years to achieve 24000 MW Capacity according to PSMP-2010 by 2021 with the aim to provide
quality and reliable electricity to all the people of country for desired economic and social
development. The power system has been expanded to keep pace with the fast growing demand.
Management of huge number of fixed assets and providing the financial information and support
to such a diverse organization made the management of Inventory and Fixed Assets by leveraging
modern technology is a burning need.
1.2 Background of the Project:
Bangladesh Power Development Board (BPDB) is a statutory body created in May 1, 1972, by
presidential Order No.59 after bifurcation of erstwhile Water and Power Development Authority,
WAPDA started its operation with installed generation capacity of only 200 MW. Installed
Generation capacity (December’2015) was increased to 12,129 MW.
In the financial year 1992-93 while approving the audited accounts of BPDB Board decided in its
614th general board meeting to maintain unit office wise Fixed Assets Register. Further to
encompasses tracking of data flow regarding fixed assets and inventory items of BPDB and to keep
the senior management up-to-date on the status of fixed assets and inventory at any point in time
and enable the management to implement appropriate control over the fixed assets and inventory
items. A separate project was formed in 742nd General Board meeting held in 1997 name
Identification. Verification, Valuation and Recording (IVVR) of Fixed Assets and Store of BPDB.
At 808th General Board meeting held in October 1998, the Board decide to engaged local consultant
in May 2000, as Operating Consultant for collection of data from 525 units offices under payment
jurisdiction of 26 Regional Accounting Office (RAO) of BPDB.
The project was completed on 31st December 2004. The completion report was approved by the
Board in its 1126th general board meeting held on 17/01/2005. With a decision to take-up second
phase of the project.
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1.3 Objectives of the Project:
The tentative objectives from IVVR (Phase-II) project are furnished bellow:
a) All fixed asset and store of BPDB will be identified, classified, revaluated with existing
condition as of 30th June 2017;
b) Value of all fixed asset will be made as per International Accounting System (IAS)-16
considering the replacement value after adjustment of back lock depreciation ; and
c) All stores of all unit offices of BPDB will be verified with technical verification & valuation
for implementation of store accounting system to find out monthly, quarterly, half yearly &
annual consumption report & stores on hand.
2.1 The scope of work of the consultants shall not be limited to the followings:
Package-A: Physical verification, valuation Recording and Reporting:
a) Identify the location of all fixed assets & store items with necessary supporting using image
& Geographical position (GPS) capturing by mobile apps developed for data collection.
b) i ) Identification , verification and valuation of unrecorded or disputed land.
ii ) Verification, valuation and recording of land already acquired for constructing or to be
constructed of public or private power plants (joint venture, public and IPP, Rental power
plants).
c) Verify the present conditions of all other fixed assets reconcile with their existing data the
same as per IAS-16
d) Review and validate the present status and the value of all fixed Assets by the unit head and
issue an Acceptance Certificate for the same.
e) Valuation of all individual fixed assets & stores in accordance with International
Accounting Standard (IAS-16 & IAS-2).
f) Processing of accumulated data by using web based application developed for data
collection.
g) Incorporation of the revalued amount of fixed assets and stores in the Financial Statement
with the approval of the Board.
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3.1 The identification, verification and valuation of the fixed or tangible assets are followed by
some general rules and guidelines that are prepared by consultants and approved by BPDB.
The general rules and guidelines related to the identification, verification and valuation of fixed
assets are furnished below:
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b. Replacement Value
c. Fair value
19. For the valuation of stores, specific identification method, as per IAS-2, has to be
followed.
20. Estimated cost may be calculated on the basis of historical data. If the historical cost is
not available, estimated cost should be calculated either on replacement cost or fair
value. The basis of valuation must be indicated while filling up the forms.
21. Estimated Depreciation is to be calculated on the straight-line –method based on the
life of the respective assets.
22. Evaluated value is to be arrived from Estimated Cost minus Estimated backlog
Depreciation.
23. Suggested rate of Depreciation is to be determined on the best judgment of the operating
consultants, considering the condition of the asset and prevailing rate of depreciation
on the similar type of asset.
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and also regional practice and procedures. The important definition related to the identification,
verification and valuation of fixed assets are furnished below:
4.1 Fixed assets:
Fixed assets means
a. The fixed assets are those assets which provides services more than three years
(Paragraph 6 of BAS-16) and
b. In convention the value of the assets is not less than taka one thousand.
4.2 Cost of Fixed assets:
The cost of fixed assets is the amount of the cash or cash equivalents paid or incurred or to be
paid or to be incurred or the fair value of other consideration given to acquire and assets at the
time of its acquisition or construction.(Paragraph 6 of BAS-16)
4.3 Depreciation:
Depreciation is the systematic allocation of the depreciable amount of an assets over its useful
live.(Paragraph 6 of BAS-16)
4.4 Depreciation Method:
Straight Line Method will be applied to systematic allocation of market value over the
estimated useful life of an asset.
4.5 Depreciable amount:
The depreciable amount is the cost of an asset or other amounts substituted for cost less its
residual value.(Paragraph 6 of BAS-16)
4.6 Back log depreciation:
Back log depreciation is the systematic allocation of the depreciable amounts of an asset over
its useful lives, expired or used.
4.7 Useful live:
Useful live is the period over which an asset is expected to be available for use by the entity.
The useful life is to be ascertained by adding expected further life with life already enjoyed by
the entity.(Paragraph 6 of BAS-16)
4.8 Market Value or Price:
Market value of an assets means by which similar type of assets and brand can be replaced with
testing and commissioning cost and value. The market value of an asset is to be ascertained
with following cost component:
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SL # Class of Assets Cost Elements of Components
Civil work (Except Value as per PWD rate or tender cost or historical cost or
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building) construction cost- whichever is higher.
Estimated plant cost plus Commissioning cost and testing cost
5 Generation Plan and expenses.
Generation Plan
Component cost plus Commissioning cost and testing cost and
6 (Component Cost Work
expenses.
Sheet)
Ex-factory price plus VAT and Tax, Commissioning cost and
7 Sub-Station (Generation)
testing cost and expenses.
Generation Ex-factory price plus Govt. duty plus Commissioning cost plus
/Transformers/
8 Testing cost plus procurement cost or Latest tender price-
Distribution power
Transformers whichever is higher.
Generation Ex-factory price plus Govt. duty plus Commissioning cost plus
/Transformers/
9 Testing cost plus procurement cost or Latest tender price-
Distribution circuit
Breakers whichever is higher.
Miscellaneous Power Estimated plant cost plus Commissioning cost and testing cost
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Plant Structures and expenses.
Ex-factory price plus Govt. duty plus Commissioning cost plus
Transmission Sub-
11 Testing cost plus procurement cost or Latest tender price-
Station
whichever is higher.
Ex-factory price plus Govt. duty plus Commissioning cost plus
12 Transmission Lines Testing cost plus procurement cost or Latest tender price-
whichever is higher.
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SL # Class of Assets Cost Elements of Components
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made discussion with the head of the Unit and other responsible officers for documentary
information and validation. The assets class wise source of information are tabulated below:
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SL# Class of Assets Source of Data
11 Transmission Sub-Station As Mentioned above
5.2 Methodology:
5.2.1. Formation of Team for Identification, Verification and Valuation:
As per Technical Proposal, a team headed by a Chartered Accountant was formed for the
identification, verification and valuation of fixed assets, at this office consisting the following
consultants:
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a) Chartered Accountant;
b) Electrical Engineer;
c) Cost and Management Accountant;
d) Civil Engineer;
e) Mechanical Engineer;
f) Management Specialist; and
g) Property Valuation Specialist.
This team has executed and implemented the tasks taking help and assistance of engineers as well
as experienced Property Physical Identification and Verification Experts. This Team was
responsible for identification, verification and valuation of fixed asset within stipulated time frame
visiting each every offices and surveying, identifying and verifying the asset physically. This team
has completed their tasks in accordance with policy guidelines formulated and framed by the
consortium. For the completion of tasks, the team has also considered the Principles and
information of the following document:
The Consultants designed 25 (Twenty Five) formats for data collection through physical
verification. The designed formats were approved by the BPDB. Our Teams commenced their tasks
with these approved formats.
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no any register of fixed assets was available for our verification. We have physical counted the
fixed assets “as is where is’’ concept within respective offices. We have determined ownership of
the property on territorial concept and we have filed in all formats (as are applicable) in accordance
with guidelines for filling up Forms. We have also strictly followed the guidelines. We never change
the contents and layout the formats in any circumstance. It may be mentioned here that after
completion of physical inventory of an office the Unit Head or designated officials of the respective
offices has signed the physical inventory sheets for confirmation, authentication and Validation.
After completion of the physical verification, our Team approached for valuation and reconciliation
of fixed assets. No any Fixed Assets Register in offices was available for reconciliation of the
quantity and value of the assets.
6.2Our consultants ascertain back log depreciation allocation the depreciable amount of the assets
over the expired life used and then fair market value will be determine deducting back log
depreciation from expected replacement cost of an assets.
6.3It is noted that, the fair market values so calculated are to be treated as a revaluation of the
respective assets.
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(a) Replacement value.
(b) Fair value.
We have ascertained estimated cost on the basis of historical cost. We have ascertained replacement
cost or fair value of the fixed assets where historical cost is not available. In case of scrap, we have
valued them ay applying fair market value as on 30 June 2017. We have also followed guidelines
of International Accounting Standard-16 (IAS-16) & BAS-13 for the valuation of the fixed assets.
According to IAS-16, we have considered the following points:
(a) Condition of the assets and its utilization;
(b) The life of the assets. We have assessed the total life of the respective assets considering
the life already enjoyed by the BPDB plus expected future life of residual life of the same
property; and
(c) Existing status whether respective asset is serviceable or unserviceable or scrap.
8.1 The synopses of the value of the fixed assets of BPDB as at 30th June 2017 are furnished below:
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Measu
Estimated Estimated Evaluated
Sl Unit Office rement Volume
Cost Depreciation Value
# Unit
1 Land Acrs
2 Plot Details SQMT
3
Building SQMT
6 Generation Plan
(Component Cost Work Pcs
Sheet)
7 Sub-Station (Generation) Km
8 Generation /Transformers/
Distribution power Pcs
Transformers
9 Generation /Transformers/
Distribution circuit Pcs
Breakers
10 Miscellaneous Power Plant
Pcs
Structures
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Transmission Sub-Station Pcs
12 Transmission Lines Km
13 Projects in Progress Pcs
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Distribution Sub-Station Pcs
16
Distribution Lines Km
14
Transport/ vehicle/Water
21 Pcs
Crafts/Fork Lift/Crane
Service, Testing, Lab,
22 Field And Other Pcs
Equipment
Total Value
8.1 (a) The list of the assets under this office is shown in FAR-3.
(b) The Conditions and Summery of the class wise of the assets under this office are shown in FAR-
2.
(c) The detailed information of the fixed assets is furnished in FAD-1 enclosed herewith.
10.1We would like to thanks to all officials and staff of this unit office, Project Director, Director
(Finance), Controller(Accounts& Finance), Member(Finance), Secretary and Chairman of
BPDB for extending whole hearted cooperation and help in implementation and executing of
consulting service for Identification, comprehensive listing, valuation/revaluation and
recording of Fixed Assets of BPDB.
The End
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