Preface of "Internal control of Fixed Asset: A Controller and Auditor's Guide" by Alfred M. King
F OR MANY COMPANIES, FIXED assets, sometimes referred to as Property, Plant, and Equipment (PP&E) represent the largest single asset category on the balance sheet. Yet rarely do fixed assets command management time that is proportionate to the magnitude of the investment. Companies may devote significant resources to capital expenditure budgeting and approval, making extremely detailed calculations about proposed capital outlays. But once the project is completed, and in operation, subsequent record keeping and controls are often lax. Management usually assumes that since fixed assets are ‘‘fixed’’there should be little trouble monitoring what is going on. Accountants are concerned with calculating annual depreciation charges, for their company’s books and taxes. Occasionally, the property record will be the basis of decisions on insurance coverage for the assets. Even less frequently, property tax assessments may be challenged, but this is often the responsibility of th...