Foreign Corrupt Practices act and Sarbanes-Oxley rules both require periodic review of an entity’s fixed assets to determine that the assets are in fact in existence. Therefore, proper Internal Control of fixed assets means that a periodic inventory of fixed assets should be taken. This poses a problem for many organizations as their fixed asset registers are incomplete and/or inaccurate.Generally, when an organization acquires a new asset, a new asset record should be created in the fixed asset system by using the purchase order to capture the relevant information about the asset such as the asset description, manufacturer, and serial number. The asset is then assigned a number which will correspond to the number on the barcode adhered to the asset. However, many organizations have not executed proper internal control over their fixed assets which leads to cumbersome asset audits as their asset registers are totally incorrect.What is done in this case is that a review most be taken of the assets in existence. All asset information must be recorded and this is then lined up against the asset register to see what items can be found in the asset register. Chances are there will be more line items in the register than are in existence and therefore steps must be taken to rebuild the asset register assigning fair market value to the items. Reducing the number of items on the asset register can be done by setting a higher minimum capitalization threshold of $2,500-$5,000.Real Asset Management’s fixed asset accounting system and fixed asset tracking software helps organizations build and maintain their asset registers. For more information, contact firstname.lastname@example.org.
Complying with Mandatory Periodic Review of Fixed Assets
Jun 03 2015