We have taken on a few small limited companies lately none of which have a fixed asset register. Are they optional these days?
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Never been required
Always has been a best practice procedure. I have seen them taken to ridiculous extremes where the only entries are the office desk & chair that are duly recorded and written down every year but then I have seen haulage firms who buy & sell trucks almost weekly who didn't seem to find it necessary.
Generally ...
... with small companies thes will be kept by the accountant on his working papers, so they should provide you with one as part of the handover.
That said, some who use the RB depreciation method often don't bother - which can make recording a fixed asset sale interesting - although thesedays with AIA it is not a big issue particularly.
Vehicles
I find that for vehicles a Plant Register (or alternative record) is essential in view of significant values and more frquentv changes to assets of this nature.
My preference is to show individual vehicle values on the face of the accounts on the balance sheet or in a note, then it is clear to the client and myself what vehicles are present on the accounts. Very easy to do in Excel accounts, not necessarily easy in accounting packages though.
I've not really used them for years
When I used to use them many years ago, they just used to become long and unwieldy, with many items just depreciated down to £1.
The business owners often didn't really know whether they still had many of the smaller items, particularly as things like "table", "HP computer" and "laptop" came up several times. Quite often the older items would just routinely be purged from the schedule, without any real consideration.
These days I depreciate most things using 25% reducing balance. My accumulated cost brought forward and depreciation brought forward no doubt contain items long since gone and my net book value may be a few hundred pounds higher than it should be, but I'm not particularly concerned about it. If I really had to then I could recreate the fixed asset register - providing the previous accountant gave me one in the first place.
They are a vital accounting record - otherwise 'adequate' accounting records are not being kept to substantiate a balance. In the regulated sector, I have seen companies fined by the then FSA for not keeping them.
Capital allowances
We don't keep fixed asset registers as such, but we enter all the plant and machinery additions individually for the capital allowances computation (in IRIS Business Tax). We can then print a list of every fixed asset (apart from property) purchased in the past and review it to see if some of the older items should be scrapped.
Risky not to, I say
Without them in the event of a valuation/sale there is a risk that items with a real value but long since written off will be undersold.
Farmers and hauliers
My preference for Ltd Co's is to, if the fixed assets are significant, always maintain a plant register. A few decades ago I came across a haulage contractor where I inherited a situation where depreciation was on a straightline basis and absent of a plant register several lorries actually had negative book value when a plant register was constructed.
When it comes to non-Ltd Co's as I said above I like to show individual vehicle values on the Balance Sheet or in a note to the accounts where the number of vehicles is small enough. In some cases I maintain a plant register for non-LtdCo's - example being a recent Farming Partnership where a page and a half of assets is in the Excel Plant register and annually the list is reviewed to ascertain which assets have been part-exchanged, scrapped or sold and then updated for current year depreciation and additions.
In some cases assets disposed of have been found to have realised more than original cost and this has tax advantages to be aware of (as in restrict proceeds to original cost in the Capital Allowances comp).
What I do
I keep a list of fixed asset movement for each year but sometimes I list individual assets. I do this so that I don't depreciate more than 100% of an asset - I use 25% of cost usually. Maybe after five years I will treat assets as being disposed of if clients don't know what assets they are still using or can't be bothered to answer the question.
EXCEL to the rescue!
I maintain a full asset register for all clients - I have some clients with several hundred "live" assets and would find it impossible to cope without a proper record.
I trained in the early seventies and have not-so-fond memories of 16-column analysis pads, worn almost through by repeated rubbing-out and correction. In the late nineties, being fed up reinventing the wheel year after year, I set to and wrote an all-singing, all-dancing, all self-calculating Excel Asset Register. Any period length, additions and disposals anytime in the year, any depreciation rate and multiple depreciation methods - even includes life-of-lease to estimated residual value!
Bliss! It takes only a minute or so to roll forward year-to-year, movements take but moments, and the all-important figures magically appear in the bottom right hand corner . . . .
If I could keep only one of the spreadsheets I have written, this is it!
Use PAT records
One of my clients has an annual system of PAT testing of all equipment. The PAT Tester records every item on a spreadsheet (via a barcode on each item). So we liaised with him and he now, effectively, verifies the existence of individual items and we have the costs and deprecation to date.
always
Always keep them.
Part of keeping proper accounting records.
How else would you calculate depreciation or eliminate the cost and depreciation on disposal.
Added to which the directors are doing a real good job of safeguarding the company's assets if they haven't a clue what they still have or Not as may be the case.
However we have seen so called accountants having dispensed with the need for any working papers whatsoever. It does seem what we find complicated or don't understand we can dispense with having never seen a use for it.
Really?
However we have seen so called accountants having dispensed with the need for any working papers whatsoever. It does seem what we find complicated or don't understand we can dispense with having never seen a use for it.
How did you find out? I know some accountants just disappear or refuse to send any information but I've never found any evidence of not having any working papers.
oh YES
However we have seen so called accountants having dispensed with the need for any working papers whatsoever. It does seem what we find complicated or don't understand we can dispense with having never seen a use for it.
How did you find out? I know some accountants just disappear or refuse to send any information but I've never found any evidence of not having any working papers.
The firm that took them over sent us what they had. Was truly appalling.
Could already see that the previous accounts bore no relation to the accounting records.
Have also worked for firms where they just copied the clients attempt at a TB into their accounts software and viewed that as job done. They were cheap but far too expensive for what was done.
I hope you didn't think I just make this [***] up.LOL
Recently we have had from not one but two badged firms Directors remuneration (above the NIC threshold) in the company accounts with no payroll records or scheme. plus other errors.
They were most upset when my colleague said "that's not very good is it?"
It has to be said standards are at an all time low and HMRC are asleep.
No, I was genuinely curious
I just wondered - honestly!
I did get some information from a franchise accountants and they had submitted accounts to Companies House without share capital when there should have been some and without any tax charge although they had sent me tax documents. I phoned them up and they said they hadn't got much information when the deadline approached so they just submitted what they'd got!
I have worse examples but it's the time of year and it would take to long to go into!
"It wasn't like that in my day"
Although I am 61 I still consider it MY DAY now.
It's good when there's very little effective competition around!
we had a proper training
Although I am 61 I still consider it MY DAY now.
It's good when there's very little effective competition around!
We had a proper training.
You are right there is no competition, unless it is on price and that's just a race to the bottom that gets rid of the clients who will never understand and you don't want anyway.
P.S. You have started to mention your age though! I am still in denial. 26
Enforcement needed
You are right there is no competition, unless it is on price and that's just a race to the bottom that gets rid of the clients who will never understand and you don't want anyway.
Very true. But this race to the bottom has knock-on consequences. If nobody is ensuring adequate accounting records are being kept, then they won't be. Similar to paying dividends without distributable reserves. These things matter.
Race to the bottom?
All you have to do is resist joining in the race. Let the businesses realise that they don't get a good service and then they will come back to you and be your most loyal customers. It's easy to say that when you have enough clients, though!
If I keep the clients books ...
... on SAGE or Openbooks I know the accounts are right (or as right as I am going to get them!), I will put the depreciation in (I think Openbooks does it for you when you post to an asset account), I will reconcile the bank and ledgers as I go, I post the wages, although again many packages do that automatically, Openbooks does, SAGE I think has to be forced via a link, so in theory I need no working papers, I can just transfer the TB in to IRIS - Openbooks even calculates the CT with very high accuracy.
If a client uses a cloud package themselves you will be monitoring throughout the year and correcting as you go.
Working papers are linking schedules from the books to the statutory accounts - if the books are properly maintained no working papers are necessary (unless you are auditing!) as the books exactly equal the statutory accounts already, you may just need a check list to tick everything is reconciled..
Not always. One of the most complex models I have had to write was for an FA Register (albeit, it was over 20 years ago when Excel was not as versatile). I'm glad to say it is still in use.
I am Admin and Finance Director of the management Co for our marina estate. When I took over there was no FA Register; however there was evidence in past invoices of purchases, such as an outboard motor, that no longer existed. With no record of assets there is no way of knowing where they went. Even if written down to nil, they should be left in the register until actually disposed IMO.