Accurate records should be maintained of the cost and accumulated depreciation of all capital assets including property, plant and equipment.
General:
The acquisition of capital assets should be organized to ensure that no unauthorized acquisitions have been made and that records of each acquisition are accurate, complete, and recorded in the appropriate period.
Responsibility
Action
Receiving Department
The physical receipt of all purchased goods should be the responsibility of the designated department.
The receiving department should inspect goods for conformity with specifications on purchase orders.
All capital assets should be identified upon their receipt by the use of a pre-numbered tag obtained from the Finance Department.
The tag should be permanently affixed in a readily visible area.
Responsibility
Action
Accounting Department
Record the property number on the tag in the detailed fixed asset ledger.
Record the location of the asset installation in the detailed fixed asset ledger.
Maintain accurate and complete detailed fixed asset ledgers.
Post asset additions, disposals and period depreciation to the detailed ledger.
Reconcile the detailed fixed asset ledger to the general ledger for asset cost and accumulated depreciation annually. Investigate and resolve differences disclosed in the reconciliation.
A Director of Finance should review the results of the reconciliation before any adjustments to the account are recorded. Such review should be evidenced by a signature.
Construction in progress should be capitalized.
No depreciation should be taken on construction in progress.
Upon completion of construction and placement in service, the asset should be removed from construction in progress and entered into the detailed fixed asset ledger in the appropriate classification. If the asset is not an eligible infrastructure capital asset reported under the Modified Approach, depreciation should now be taken on the asset.
