How to perform fixed asset reconciliation

Hello! At my current organization, we have a fixed asset module within our software (Financial Edge), so I am able to pull a report at any time that lists each asset's cost, accumulated depreciation and current book value. I tie this out to my balance sheet every month, and I also keep a separate up-to-date record in Excel that has more detail that my managers need, particularly for audits (location, user, etc.).

My previous employer's software did not have a fixed asset module, so I created a similar Excel spreadsheet with every record and then tied that out to the GL balances each month. At year end, the auditor requested a GL detail for each asset to verify the amounts with my spreadsheet. The depreciation schedule was set in the beginning of each fiscal year and then updated at year end for new and disposed assets. A little more cumbersome, but definitely doable if your software can't do it for you!

The general concept is....(same as other inventoriable asset)

Physical existence/Inventory/ownership (including condition or appraisal) = Transactions (initial recording, transactions/improvements, depreciation) = Balance Sheet number

I like Emerson's reference to inventoriable assets. Like inventory, periodically you need to do a physical count of your fixed assets to verify their existance, continued use/useful life, etc. However, unlike material inventory, you usually don't do the physical count of fixed assets every year because the assets don't turn over as frequently. In between the physicals, you have the detailed listings Rachel mentions to confirm that you have records that tie to your balance sheet number and roll forward the net assets for capital spending, depreciation, disposals and transfers.

Th most difficult part of the fixed asset equation is software/application capitalization.

I'd like to hear opines on verifying the numbers (the accounting discussed above is the same).

Good morning.
I have worked for a large nonprofit for 27 years and have implemented nearly all the core financial applications. We use a separate piece of software from our accounting applicatio, Sage FAS, to track out fixed assets (facility, vehicles and equipment). A master Excel spreadsheet reconciles FAS to our balance sheet accounts by cost center for all three asset classes. This approach has worked seamlessly for 17 years. In my experience, I have found most integrated FA modules do not offer a great deal of flexibility and customization to for the company's accounting structure so having a separate piece of software was very beneficial for getting what you want.

We do a physical scavenger hunt for our tangible fixed assets on a biennial basis (every 2 years) per our company audit policy. Doing a physical count every year would be too chaotic for staff to cope,

As for software capitalization, we amortize 'off the shelf' software ($5,000+) for three years; customized software for five years.

Hope this input helps.

--Kevin