Mining and Extractive Industries

Activa has been associated with the mining, quarrying and other extractive industries for more than 15 years. Our principals also have first hand experience of the oil industry in shipping, refinery production, marketing operations and distribution in both operational and senior management positions. As a consequence we have developed a number of specialised functions to assist our clients to more easily meet their business and tax reporting requirements.

Activa provides a solution for each of these tasks and removes the need for complex external spreadsheet reporting. Since we take a practical, rather than a purely financial approach to recording asset information, there is a full and comprehensive life-cycle and transaction history maintained for each asset record. This attention to detail is combined with a number of specialist features that we have developed to simplify general data maintenance and the overall reporting task.

The proposed MRT or MRRT legislation incorporates provisions for qualifying historical assets in three distinct categories; for pre-existing assets at their April 2010 market value, transitional qualifying asset purchases from April 2010 up to the proposed implementation date of July 1st 2012 and fully deductible future qualifying capital expenditure beyond 1st July 2012.

Activa can accomodate these requirements without software modification and with the minimum of consulting fuss, integrating the entire process into your current asset register month end/year end processing regime. Call us and we would be happy to discuss this solution with you.

The Units of Use depreciation methodology is a system standard function of the Fixed Assets Register but this is enhanced by the Bulk Units of Use option to incorporate the ability to apply units of production to specific groups of assets in a one-step process. It also includes a special data capture facility for assets that are subject to individual use metrics.

Minor differences in the accounting treatments internationally may call for the application of different resource bases [Resource versus Resource + Reserves] to the algorithm requiring two separate depreciation books. Activa achieves this very simply. It also provides the Lag Test or Depletion Method option to deal with material movements in the resource base.

Traditionally, revised resource assessments are applied retrospectively within a given accounting year requiring a recalculation of the depreciation charges. Activa provides full depreciation roll-back without loss of other data transaction integrity.

Although royalty legislation may vary state to state it is fundamentally based on the principle of an allowance for the value-added processing and sale of the refined commodity. Assets in this service attract this concessional deduction in varying degrees based on their application.

Activa uses an additional book for depreciation of assets in line with royalty legislation and by applying a simple mask to the data structure to identify the relevant processes is able to automatically extrapolate the periodic deduction. This approach simplifies the periodic royalty calculations by generating a one-step report and totally removing the need for complex spreadsheets.

The provision for post-production mine development expenditure can be capitalised from the outset as a single ‘asset’ record and depreciated for accounting purposes over the life of the mine using the standard Units of Production method. This allows for the inclusion of this deduction in the statutory accounts but excludes it from the tax deductions.

As development projects are completed this single record is progressively split to establish separate asset records for periodic capital mine development expenditure and is then `capitalised` for tax purposes, retaining the historical financial depreciation history intact.

This simple approach removes the difficulties of applying the correct periodic charge to this provision and maintains a precise history of the progressive investment of the funds over the life of the project.

Joint Venture Accounting extends the functionality of a normal multi-database system of asset registers to incorporate the ownership structure and history of a joint venture and its business partners. The reporting requirements for joint venture accounting create the need to manage the individual ownership of each venture partner with a minimum of administrative effort.

Activa can accommodate one or more joint ventures in a single system by using multiple databases and an intelligent interface to pass common transaction data between them in the appropriate proportions and under the prescribed conditions with no additional user input.

The Activa Contracts module incorporates Finance Leases, Operating Leases, Hire Purchase contracts and Property Leases into a single comprehensive package. It provides payments in advance, payments in arrears, variable interest, interest only and structured contract types with detailed amortisation schedules, future payments summaries and IAS 17 compliance reporting. Each contract can be for a single or bulk asset contract and incorporates early retirements, early termination and contract roll-over transactions.

The Finance and Operating Contracts module integrates directly with the Fixed Asset Register and links directly to the associated asset records.

These notes are intended as a product brief and should not be read as the full specification of Activa software. If you have more specific questions please use the Search or FAQ options on this site. If you do not find what you are looking for on other pages of this site please complete a Contact Request noting your area of interest and we will respond by return.

The following pages contain a little more detail on some the items discussed above;

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Article last updated : Mar 5 2012 12:47PM