Due to the amount invested in fixed assets in many companies, there may be a specific person assigned within the accounting, finance, or controllers department to keep track of property, plant, and equipment. This person may be called a fixed asset accountant, property accountant, or may have some other similar title. This accountant’s primary responsibility is to maintain the official fixed assets records for the business or organization. This may be a full-time position in a company that has a large investment in fixed assets and that has either a high volume of activity in fixed assets, or has major capital expenditure projects in process. In operations where keeping track of fixed assets does not involve sufficient work to occupy an accountant full-time, this responsibility may be combined with other accounting duties.
The level of responsibility of the person in charge of fixed assets, and the functions performed will also depend on the size and nature of the operation, and the way in which the organization is set up to handle accounting and reporting for property, plant, and equipment. Accounting for fixed assets may be more of a clerical function, involving entering data and maintaining records. Or the position could involve more of a financial analyst role, where the person would participate in economic evaluations of proposed projects. An audit role may also form part of the overall planning, controlling and reporting function for capital expenditures.
What Does A Fixed Asset or Property Accountant Do?
In an accounting and administrative capacity, the person in charge of fixed assets will maintain the fixed assets register. This may be a spreadsheet application, a separate module within the accounting system, or a more elaborate system.
Some of the duties of a fixed asset clerk or accountant include:
Ã?Â· Coding invoices for fixed asset purchases with the appropriate general ledger account number, business unit, or cost center.
Running queries on disbursements to identify capital expenditures.
Ã?Â· Analyzing general ledger accounts, to identify costs that should be capitalized and included in fixed assets.
Ã?Â· Completing standardized forms to set up entries on the fixed asset register, or in the asset management system.
Ã?Â· Preparing capitalization entries.
Ã?Â· Monitoring reports to ensure that assets are correctly entered into the fixed assets subledger.
Ã?Â· Completing forms to record transfers of equipment from one department to another, relocations of equipment, sales, disposals, thefts, and other losses.
Ã?Â· Maintaining a control listing of asset ID numbers.
Ã?Â· Reconciling the fixed asset register or subledger, or the subsidiary asset management system to the general ledger control account for each class of fixed assets, and resolving any reconciling items.
Ã?Â· Preparing depreciation schedules and making accounting entries to record depreciation expense.
Ã?Â· Keeping files of all supporting documentation for fixed assets and capital projects.
Ã?Â· Generation of capital projects lists and reports of capitalized assets, values, and depreciation.
Ã?Â· Maintaining schedules and files of insurance policies on fixed assets.
Ã?Â· Providing information for fixed asset reporting, such as summarizing financial activity for inclusion in the property, plant and equipment section of the financial statements.
Ã?Â· Providing information for the preparation of tax schedules for depreciation and for gains and losses on the sale or exchange of fixed assets.
Ã?Â· Administering a database for operating leases.
Ã?Â· Controlling assets that are not capitalized but for which a control register is maintained, such as tools and small equipment.
Ã?Â· Coordinating the physical inventory process for fixed assets.
Ã?Â· Reviews of asset activity for compliance with company policy.
If the accountant or financial analyst is involved in fixed asset planning and economic analysis and reporting, the position may include the following duties, either in addition to those described above, or as part of a separate role. Several of these duties may be carried out as part of a team, including operations managers, safety and environmental specialists, engineers, and others involved in the analysis and planning of capital projects.
Ã?Â· Preparation of capital budgets and cash flow forecasts.
Ã?Â· Cost of capital calculations.
Ã?Â· Feasibility studies, including financial metrics such as net present value, discounted cash flows, internal rate of return, and return on investment.
Ã?Â· Sensitivity analyses.
Ã?Â· Classification of projects as replacement, expansion, safety and environmental, and others.
Ã?Â· Estimates of useful lives and salvage values of assets.
Ã?Â· Determination of depreciation methods to be used for financial accounting and tax purposes.
Ã?Â· Audits of capital projects.
How Are the Working Conditions?
Fixed assets or property accountants and clerks generally work in normal office conditions, with occasional work in the field to collect information; verify the physical existence, location, and condition of assets; place identifying labels on assets; and to take physical inventories. This work generally involves a normal office schedule, with occasional overtime as required during peak periods, such as when closing the accounting books for the month, at year-end, and during reporting periods or physical inventories.
Fixed assets accountants and clerks may be assigned to a plant or field location when working on a construction project, or may be permanently assigned to a plant, manufacturing, mining or extraction jobsite. In this case, there may be shift work involved, and if accommodations are provided on site, the work may involve being away from home.
Accountants and clerks will spend a considerable amount of time working at a computer, under self-direction, but in close coordination with other members of the accounting department. There will also be contact with members of other operating departments, as well as with vendors and suppliers, insurance companies, and potentially with tax or regulatory agencies for reporting and coordination purposes.
Accountants or analysts who are more involved in the planning and evaluation aspects of fixed assets and capital projects will work closely with other professionals, often as part of multi-disciplinary team, and will also have more contact with operations and company management.
What Are the Requirements?
The requirements for a position in fixed assets and capital accounting depend on the level of the position and the duties and responsibilities inherent in that position. In general, the following attributes are needed:
Ã?Â· Good administrative, organizational and analytical abilities.
Ã?Â· Strong initiative and the ability to work independently and in a team atmosphere.
Ã?Â· Strong verbal and written communications and interpersonal skills.
Ã?Â· Knowledge of computer applications, with the ability to create complex spreadsheets.
Ã?Â· Specific knowledge and understanding of the fixed asset management system used in the organization.
Ã?Â· Knowledge of general property accounting principles and practices.
Ã?Â· Understanding of the organization’s policies and procedures regarding fixed assets and capital expenditures.
Ã?Â· Understanding of depreciation methods for financial accounting and tax purposes, such as straight-line, accelerated, and MACRS.
Ã?Â· For a role in the evaluation and planning of capital expenditures and projects, the person must be proficient in financial analysis techniques.
A person with strong administrative abilities may be able to take on an entry-level position as a fixed assets clerk. An accounting background is a definite advantage, and a clerical position may be held by someone with an associate’s degree in accounting, or who is pursuing an accounting degree. For a higher-level position, an accounting degree is normally required, and preference may be given to a Certified Public Accountant (CPA). For a position as a financial analyst, an accounting or finance degree, and an MBA or engineering degree may be needed.
A person with the right personal qualifications may be trained in fixed asset accounting, and in the organization’s fixed asset management system, to work as a clerk or entry-level accountant. As experience is gained, positions of increasing responsibility can open up.
Previous experience in accounting, and particularly in property, plant and equipment accounting, is generally required for a senior-level accountant or management accountant position. An analyst will need experience in the financial aspects of fixed asset accounting, budgeting and reporting, particularly financial planning and analysis techniques. Technical work in operations, such as in engineering, and experience in capital projects may also be required for an analyst position.
What Are the Career Possibilities?
An accountant with the right knowledge and experience can make a career in fixed assets or property accounting. A large organization may have several positions in the accounting department dedicated to property, plant, and equipment, with increasing levels of responsibility. There may also be opportunities to specialize in a certain aspect, such as budgeting, financial or tax reporting. Or, experience in property accounting can lead to a more senior-level position in the overall accounting operation.
Knowledge and experience in fixed asset accounting can lead to an auditing career specializing in this area, either as an independent or internal auditor. And, a strong background in property accounting may serve as good preparation for other types of more general auditing positions.
Another career path is to move up to a position as a financial analyst, working in capital budgeting and forecasting, and capital project evaluation, planning, and control. This could also eventually lead to a management position in operations, for a person with the necessary technical qualifications and leadership abilities.