Fixed Asset Inventory

The Importance of Accurate Fixed Asset Records

Why is an inventory of a company’s fixed assets important? It is critical to have accurate financial records to comply with accounting and tax requirements and it could save you thousands--even millions---of tax dollars.

An accurate accounting and valuation of fixed assets is critical because it can save your company money. Lots of money. Even if you perform a physical inventory of fixed assets every few years, it is still likely the fixed asset information is not sufficient to create the financial and tax benefits that are available. This results in money that can improve a company’s cash flow.

For many reasons, including lack of attention and insufficient time and resources to search out all the detail, fixed assets are often misidentified and misclassified, and sometimes remain on a company’s books when they no longer exist. Experience indicates that from 12% to 18% of assets on the books of a company are fully depreciated or no longer exist, and another 10% to 15% are misidentified and misclassified for tax purposes.

Tax departments depend on the accuracy of the fixed asset ledger for reporting their assets on federal, state and property tax returns and remit tax based on amounts reported in the tax returns. Of the benefits we create, approximately 30% is attributable to “ghost” assets and 70% is related to classification issues and exempt assets.

How It Works

General Financial and Tax Consulting’s fixed asset inventory program provides more than an accurate accounting and verification of the classification. Our process tracks, reconciles and provides the information required to correct the cost and tax value as well as classifications of all fixed assets, whether they were purchased or the result of an acquisition. Some of our services are available on a stand-alone basis or in combination with two or more other services. These include:

• Physical fixed asset inventories
• Reconciliation of tax returns to the fixed asset ledger
• Replacement cost calculations for insurance purposes
• Assistance with Sarbanes-Oxley compliance (SAS-70, Type II Letter)
• Recommend changes in accounting policies and procedures
• Recommend changes in asset classifications and capitalization procedures

How You Can Benefit

In addition to an accurate listing of fixed assets and a correct fixed asset ledger, other benefits can be derived from a detailed fixed asset inventory by GFTC. These include:

• A reduction in current year federal, state and local income taxes
• A reduction of real and personal property taxes
• A reduction in insurance premiums paid on fixed assets
• A reduction in fixed asset management costs
• A reduction in SOX compliance costs

GFTC’s fixed asset and tax management solutions can also help you use barcoding to tie your fixed asset ledger in with your company’s maintenance processes so your books are continuously updated as maintenance is performed.

Get Started

Whether you are ready to get started or have additional questions, the first step is to contact GFTC. We want to hear your questions and explain how we can work with you. Many of our clients have similar questions, and you may be able to benefit from their experience. Start by filling out and submitting the contact form on this web site. If you would like additional information, have more questions, or want to discuss your situation, call us at (800) 733-5252 ext. 7000.