Asset Inventories

Each governmental entity should have an inventory of tangible assets. In addition to complying with accounting standards, an inventory may help determine the extent of loss if a break-in, fire, or other disaster occurs. It can also help detect employee thefts.

To develop and maintain a tangible asset inventory system, we recommend that public entities:

  • Set a minimum dollar value for assets or class of assets that will be included on the asset inventory list(s);
  • Assign actual or estimated historical costs to each item;
  • Create an inventory listing of all assets above the minimum dollar amount;
  • Assign the responsibility for knowing the location of each asset to a department head or official;
  • Label each asset with identifying information, such as the name of the public entity and a unique asset number;
  • Record the disposal and acquisition of assets; and
  • Keep your asset inventories current by conducting physical inventory inspections and counts on a regular basis.

For “capital assets” as defined by governmental accounting principles:

  • Identify and record capital asset information in your accounting system;
  • Determine the useful life for various classes of assets to be used for depreciation purposes; and
  • Create general ledger account codes to record capital asset transactions.

More information on inventories is found in “A Guide to Local Government Capital Assets,” here.

Date this Avoiding Pitfall was most recently published: 08/28/2020