By Marla Williams, CPPM
President, Integrated Asset Management, Inc.
Executive Vice President, Federal Center Chapter
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Systematic recording and reporting of
financial transactions of the organization.
Must follow a set of Generally Accepted
Accounting Principles (GAAP) applicable to
their entity
Federal entities must follow Federal
Accounting Standards Advisory Board
(FASAB) Standards
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1990 - Congress passed the Chief Financial
Officer’s Act (CFO Act), requiring audited
financial statements for some federal entities
◦ No Source for Standards
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1990 - Legislative and Executive branches
came together for the first time to create
Financial Accounting Standards Board (FASB).
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1973 - FASB was designated as the standards
setter for nongovernmental entities by
the American Institute of Certified Public
Accountants (AICPA) Council
1986 – Governmental Accounting Board
(GASB) was designated by the AICPA
Council as the standards-setter for state and
local governmental entities
1999 – FASAB was designated to be the
standards-setter for federal government
entities
Joe's Taco Stands
ASSETS
LIABILITIES
Current Assets
Current Liabilities
Cash
$450
Notes Payable
$2,000
Petty Cash
$100
Accounts Payable
$5,000
Taxes Payable
$2,000
Inventory
$10,000
Supplies
$3,000
Total Current Assets
Total Current Liabilities
$9,000
$13,550
Long Term Liability
Property Plant &
Equipment
10-Year Note
Equipment
$400,000
Less: Accum Depreciation
-$50,000
Prop Plant & Equip - net
Total Long Term Liability
$350,000Total Liabilities
Owner Equity
Total Assets
$363,550Total Liab. & Owner Equity
$345,000
$345,000
$354,000
$9,550
$363,550
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Tangible Assets
◦ Current Assets(Cash, Inventory)
◦ Fixed Assets (Building and Equipment)
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Intangible Assets
◦ Not physical
 Copyright, patents, trademarks
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Obligation arising from past event
◦ Loans, credit lines, credit cards
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Current Liabilities
◦ Short Term (< One Year)
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Long Term Liabilities
◦ Mortgage
◦ Note
Joe's Taco Stands
ASSETS
LIABILITIES
Current Assets
Current Liabilities
Cash
$450
Notes Payable
$2,000
Petty Cash
$100
Accounts Payable
$5,000
Taxes Payable
$2,000
Inventory
$10,000
Supplies
$3,000
Total Current Assets
Total Current Liabilities
$9,000
$13,550
Long Term Liability
Property Plant &
Equipment
10-Year Note
Equipment
$400,000
Less: Accum Depreciation
-$50,000
Prop Plant & Equip - net
Total Long Term Liability
$350,000Total Liabilities
Owner Equity
Total Assets
$363,550Total Liab. & Owner Equity
$345,000
$345,000
$354,000
$9,550
$363,550
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Land, Land Improvements, Buildings and
Equipment
Cost more than a certain threshold
Usually held for a period of more than 1 year
Recognized on Financial Statement
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Purchase price doesn’t meet Capitalization
Threshold
Often identified by minimum price
◦ For example, Controlled Assets are assets with a
purchase price of $500 to $4,999 and Capital
Assets are assets with a price of $5,000 or higher
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Not reported on financial statements
Risk of Loss
◦ See ASTM E2608 which gives structure for
determining level of control based upon risk of loss
to society, environment, organization and
individuals
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Recorded on Financial Statements
Historical Cost, Market Value, Expected Value
Cost includes:
◦ Price of cost of construction plus any other charges
incurred to place the asset in its intended location
and condition for use. Includes:
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Legal and title fees
Appraisal and negotiation fees
Architect and accounting fees
Demolition cost
Installation charges
Transportation charges
Interest cost during construction
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Applies to Capital Assets only
Not the same as driving your new car off the
lot
Organization buys a Capital Asset
Allocates expense over life of asset
Many methods to calculate depreciation
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Most Common Type
Straight Line
 $500 (Cost of Asset)
 Divided by 5 Years (Life of
Asset)
 $100 Depreciation
Recognized each year
 /5=$100 per year
Asset Cost
500.00
Less Depreciation Year 1
-100.00
Net Asset Value End Year 1
400.00
Less Depreciation Year 2
-100.00
Net Asset Value End Year 2
300.00
Less Depreciation Year 3
-100.00
Net Asset Value End Year 3
200.00
Less Depreciation Year 4
-100.00
Net Asset Value End Year 4
100.00
Less Depreciation Year 5
-100.00
Net Asset Value End Year 5
0.00
Asset Management
Plan
Procure
Receive
Use
Redeploy
Dispose
Disp
Do
Budget
Procure
Recognize
Depreciate
Asset Accounting
Audit
Transfer
Retire
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Capital Asset expenditures are budgeted from 1-5
years in advance based upon data available today
and forecasts provided by departments within the
organizations
Actual income/expenses are typically tracked
against budget income/expenses
Asset Manager may be asked to provide reports,
typically not consulted on budget issues
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Assets Requisitioned by Departments
against their budget.
Small purchases are often made by
Departments or using credit cards
Larger purchases - Purchasing
selects vendor
◦ Purchasing issues Purchase Order to
vendor
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Documents/Data
◦ Purchase Requisition
◦ Purchase Order
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Issues
◦ Credit Card Purchases slip through
cracks
◦ Line Items in PO must be combined
or split to match a physical asset
◦ Model Number or description on PO
may differ from actual
◦ Shipping/installation costs are not
provided on PO
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Asset is physically received
◦ Shipping/Receiving reports are completed
◦ Asset put into use
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Asset is “received” in financial system
Invoice is received and entered into
financial system by Accounts Payable
Payment of Invoice is authorized
Capital Assets are recognized on
General Ledger (usually involves some
manual reconciliation)
Documents/Data
◦ Shipping/Receiving
◦ Invoice
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Issues
◦ Equipment purchased with credit cards never properly
recorded
◦ Receiving clerk at the warehouse does not collect serial
number or tag asset before delivering it to the user –
Finance requests the information two months later and the
search begins. . .
◦ Description from PO is used for Capital Asset record
 “Dell Computer System” without a serial number or asset
tag can’t be found under audit
 Model Number we ordered doesn’t always match the
model number we received on computers . .
◦ Purchase cost from PO is used instead of cost ship and
install the asset for use
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Asset is deployed for use
Depreciation is allocated over life
Financial Audits verify records that
support financial statements match
reality
Physical inventories verify records
match reality and update records
Other Documents/Data
Move Requests IT Auto Discover
Work Orders
Fleet Fueling
Help Desk
Facilities/Move Mgmt
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Issues
◦ Asset management
personnel play catch up,
after the fact
◦ Hours wasted searching for
equipment that was replaced or
transferred without notifying asset
managers
◦ Physical inventories are used to
maintain asset locations and status
instead of existing systems
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Surplus assets are identified
Surplus asset listings
provided to Purchasing and
departments
Surplus assets are redeployed
Transfers recorded in G/L
Documents/Data
◦ Surplus Listings
◦ Facilities/Move Work Order
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Issues
◦ Surplus assets are often disposed
of without notifying other
departments or Purchasing of their
existence
◦ Surplus assets are hoarded in case
they are needed someday,
becoming obsolete before they can
be used
◦ Surplus asset listings are general
and required potential users to visit
a remote warehouse to see what’s
available
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When asset is no longer needed by organization, it
is disposed of
Feds have GSA screening
DOD has DRMO screening
Retirement must be recorded
in GlL for financials
Documents/Data
◦ Authorization to Dispose or Donate
◦ Sales Document
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Issues
◦ Disposals never recognized in G/L
◦ Disposals end up in the wrong place (overseas or in
someone’s garage) – this is when documentation is key!
◦ Some electronics components can be considered hazardous
waste and must be disposed of properly
Asset Management
Plan
Procure
Receive
Use
Redeploy
Dispose
Disp
Do
Budget
Procure
Recognize
Depreciate
Asset Accounting
Audit
Transfer
Retire
Marla Williams, CPPM
President
Integrated Asset Management, Inc.
marla@weinventoryassets.com
(800) 731-9569
Millersville, Maryland