Establishing proper internal fixed asset controls is pertinent to successfully managing assets. Fixed assets that meet or exceed a stated value threshold should be capitalized and recorded in a fixed asset register. At a minimum, the register should include; cost, useful life, current and accumulated depreciation, and net book value.
Assets that fall below the stated threshold should be expensed. Procedures and policies should be established that govern; acquisitions, transfers, and disposals of capital fixed assets. Fixed assets’ useful lives should be clearly defined and be consistent with these policies.
Finance should maintain an up-to-date fixed assets register and the register should be reconciled to the general ledger on a monthly basis. All tangible fixed assets should be promptly tagged to permit easy identification.
The accuracy of the register should be verified through periodic fixed asset inventory counts. Fixed assets at all locations should be counted and checked against book records at least once every two years. Variances should be investigated thoroughly before adjustments are made to financial records.
All fixed asset movement and transfers should be governed by written policy and monitored. Disposals of capitalized fixed assets must be authorized. There should be segregation of responsibilities between the following functions; fixed asset custodians, maintainers of the fixed asset register, and those who conduct reconciliation activities.