Recently, Resource Hub was lucky enough to have the opportunity to support a Regional Council with preparation of their landfill provision journals as well as full cost price modelling. It was really interesting to see the different approaches taken in local government and the commercial sector when it comes to accounting for landfill airspace and waste management in general. Because of the differences that we noted in our usual approach as compared to the historical calculations of the project council, we thought we’d take the opportunity to research the different practices in accounting for waste management across Australia. It was fascinating to find that in addition to tax requirement, each state has its own recommendations of approach. Some of these align, however they are often broad brushstroke recommendations that are used by financial specialists to understand how to model an industry where they may not know the financial complexities or risks – especially in Local Government.
Our knowledge share is the below, and we’d love for it to be a conversation starter (and for the waste manager reading this, to share with their finance team!
- Airspace is an asset which means ideally it is sitting on a balance sheet. As such, we don’t include air space utilisation as a specific cost in rehab or restoration provisions. It’s a depreciation cost.
- To calculate a well planned restoration or rehab provision journal, costings should focus on the future intended use of the big block of dirt that you will be left with. If the future use and approvals include turning your capped landfill into a transfer station, then the costs will be different to those incurred if you were intending to turn that land into parkland or paddock.
- And finally, outcomes are always improved when financial reporting for waste management assets is prepared involving key waste management team members. We are lucky to have Lacey, an accountant who talks rubbish and finance fluently, but that isn’t always the case. So if you are an internal finance manager who doesn’t chat to the waste manager very often, pick up the phone! And vice versa – if you’re a waste director who doesn’t query financial statements with your finance team, there are huge opportunities in doing so!
And if you’re not sure who to call, give Resource Hub a shout!