Capital assets are defined as all tangible and intangible assets used in operations that have useful lives greater than one year. Capital assets are the largest asset on most governments’ statements of net position. Although large in dollar amount, the accounting and internal controls related to capital assets have not historically received the same level of attention in the government sector as in private industry.
This is mostly due to two reasons:
Accordingly, governments did not historically put substantial effort into tracking capital assets. Physical inventories of capital assets were seldom done.
Now that capital assets are recorded in the entity-wide financial statements, governments and auditors are giving capital assets more attention.
Particularly, auditors are delivering audit findings such as:
Following is a list of the primary internal controls that a government should have in place to properly account for its capital assets:
By incorporating these internal controls into your government’s processes, you can ensure that capital assets are more properly accounted for.
If you have more questions related to government capital assets, feel free to reach out to Kevin directly:
Kevin Harper, CPA
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Kevin W. Harper is a certified public accountant and has decades of audit and consulting experience, entirely in service to local governments. He is committed to helping government entities improve internal operations and enact controls that will minimize risk and improve day-to-day functions.
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