Qualified Audit Opinions: Failure to Account for Capital Assets

Legislation, such as GASB 34, requires school districts and other public entities to accurately track and account for fixed assets. Without proper systems in place, this can certainly be a challenge. Quite honestly, even with an advanced system in place, it can still be difficult to keep up with the ever changing landscape of fixed assets around your school district, city, or town.

Failure to properly track and account for fixed assets can result in receiving a qualified audit opinion indicating your auditor believes there has been a departure from the requirements of GASB 34. To ensure you don’t receive a qualified audit opinion for poor capital asset tracking, we recommend the following strategies:

  1. Perform a Physical Inventory
    Regardless of the policies and procedures you have in place for tracking assets throughout the year, you’ll want to perform a physical inventory every so often. We recommend once every two to three years to make sure all capitalized assets in place and in use are on your books while those that have been disposed of are not. This can be done in house or contracted out to a third party.
  1. Review your Policies & Procedures
    Immediately following the completion of a physical inventory is a great time to review your policies and procedures. There is a good chance the inventory revealed some gaps in your process that may need to be clarified or recommunicated to those responsible for capital assets.
  1. Look to the Future
    Leveraging a capital asset management software solution allows you to add, delete, and move assets throughout the year while maintaining a complete history of changes and transfers made to each asset. Alternatively, having an independent third party perform a re-inventory and reconciliation is another way to make sure your data stays up to date well into the future.

We hope these strategies help you stay on track to receive unqualified audit opinions for years to come. If you have additional questions or would like to speak to an expert in more detail about capital asset management, feel free to contact us at any time – info@assetworks.com. We’re always happy to help.

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