Fixed asset compliance team reviewing GAAP and IFRS regulatory standards in corporate office
Compliance & Standards

Fixed Asset Compliance Best Practices

Navigate GAAP, IFRS, GASB, and SOX requirements with confidence. CPCON delivers audit-ready fixed asset programs that ensure regulatory compliance and protect your financial statements.

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Why Fixed Asset Compliance Matters More Than Ever

Regulatory scrutiny of fixed asset reporting has intensified across every sector. Under ASC 360 (GAAP) and IAS 16/IAS 36 (IFRS), organizations must demonstrate that their asset registers are accurate, impairment testing is current, and depreciation schedules reflect economic reality — not just historical assumptions.

Non-compliance carries real consequences: restated financials, audit qualifications, regulatory penalties, and eroded investor confidence. CPCON helps organizations build proactive compliance programs that transform fixed asset management from a year-end scramble into a continuous, audit-ready process.

With 30+ years of experience across 50+ countries, our certified professionals understand the nuances of multi-jurisdictional compliance — from U.S. GAAP and IFRS convergence to GASB requirements for government entities and SOX Section 404 internal controls.

CPCON compliance professional reviewing fixed asset depreciation schedules and regulatory standards
50+
Countries with compliance expertise

Common Compliance Challenges

These are the most frequent fixed asset compliance issues we encounter — and resolve — for organizations across industries.

Ghost Assets Inflating Registers

Assets that no longer exist physically but remain on the books distort depreciation expense, inflate insurance premiums, and create audit risk. Regular physical verification eliminates ghost assets.

Inconsistent Capitalization Policies

Without clear thresholds and guidelines, similar expenditures get treated differently across departments or locations, leading to material misstatements and audit findings.

Delayed Impairment Recognition

Organizations often fail to identify triggering events or delay impairment testing, resulting in overstated asset values and potential restatements when auditors catch the gap.

Multi-Jurisdiction Complexity

Global organizations must reconcile different standards (GAAP, IFRS, local GAAP) across entities, creating complexity in consolidation and intercompany asset transfers.

ERP Data Quality Issues

Legacy data, duplicate records, missing fields, and inconsistent coding in ERP systems undermine the reliability of fixed asset reporting and make reconciliation painful.

Weak Internal Controls

Insufficient segregation of duties, missing approval workflows, and lack of documentation expose organizations to SOX deficiencies and material weakness findings.

Regulatory Frameworks We Navigate

CPCON maintains deep expertise across all major accounting standards and regulatory frameworks governing fixed asset management and reporting.

ASC 360 (U.S. GAAP)

Property, Plant & Equipment

  • Impairment testing under ASC 360-10
  • Long-lived asset recoverability assessments
  • Asset group identification and fair value measurement
  • Disposal and abandonment accounting
  • Held-for-sale classification criteria

IAS 16 / IAS 36 (IFRS)

International Standards

  • Component depreciation approach
  • Revaluation model vs. cost model elections
  • Cash-generating unit impairment testing
  • Residual value and useful life reassessment
  • Borrowing cost capitalization under IAS 23

GASB Standards

Government & Public Sector

  • GASB 34 capital asset reporting
  • GASB 87 lease accounting compliance
  • Infrastructure asset condition assessments
  • Modified approach for infrastructure reporting
  • Capital asset threshold and policy alignment

SOX Section 404

Internal Controls

  • Fixed asset control environment design
  • Key vs. non-key control identification
  • Segregation of duties for asset transactions
  • Automated control testing and monitoring
  • Management assertion documentation

8 Best Practices for Fixed Asset Compliance

These proven practices help organizations maintain audit-ready fixed asset programs that satisfy GAAP, IFRS, GASB, and SOX requirements year-round.

01

Establish a Comprehensive Fixed Asset Policy

Define capitalization thresholds, useful life standards, depreciation methods, and impairment triggers. A well-documented policy is the foundation of every compliant fixed asset program and the first thing auditors request.

02

Conduct Regular Physical Verification

Annual or semi-annual physical inventories reconcile your asset register against what actually exists. This identifies ghost assets, unrecorded additions, and location discrepancies before they become audit findings.

03

Implement Proper Asset Tagging

Every capitalized asset should carry a unique identifier — barcode, QR code, or RFID tag — linked to your ERP system. Consistent tagging eliminates duplicate records and enables rapid field verification.

04

Maintain Accurate Depreciation Schedules

Review useful lives and residual values annually. Under both GAAP and IFRS, depreciation must reflect the pattern of economic benefit consumption — not simply a default straight-line assumption.

05

Perform Timely Impairment Testing

Monitor triggering events — market declines, operational changes, technological obsolescence — and test recoverability promptly. Delayed impairment recognition is one of the most common audit deficiencies.

06

Document Internal Controls

Map every control point in the fixed asset lifecycle: authorization, recording, custody, and reconciliation. SOX-compliant organizations must demonstrate that controls are designed effectively and operating consistently.

07

Reconcile Sub-Ledger to General Ledger Monthly

Monthly reconciliation catches errors early and prevents year-end surprises. Automated reconciliation tools can flag discrepancies in real time, reducing manual effort and improving accuracy.

08

Leverage Technology for Continuous Monitoring

Replace periodic manual audits with technology-driven continuous monitoring. RFID, IoT sensors, and cloud-based platforms provide real-time asset visibility and automated compliance reporting.

GAAP vs. IFRS: Key Differences in Fixed Asset Accounting

Understanding the differences between U.S. GAAP and IFRS is critical for multinational organizations and those preparing for standards convergence.

DimensionU.S. GAAPIFRS
Depreciation MethodStraight-line, declining balance, units-of-production; component depreciation permitted but not requiredSame methods available; component depreciation required under IAS 16
RevaluationNot permitted (cost model only)Permitted under revaluation model; must be applied to entire class of assets
Impairment TestingTwo-step: recoverability test then fair value measurement (ASC 360-10)One-step: compare carrying amount to recoverable amount (IAS 36)
Impairment ReversalNot permitted for assets held and usedPermitted (except goodwill); reversal limited to original carrying amount
Useful Life ReviewReviewed when circumstances changeReviewed at least annually
Residual ValueEstimated at acquisition; reviewed when circumstances changeReviewed at least annually; based on current market conditions
Capitalization of Borrowing CostsRequired for qualifying assets (ASC 835-20)Required for qualifying assets (IAS 23)
Asset ExchangesFair value unless exchange lacks commercial substanceFair value unless exchange lacks commercial substance or fair value not reliably measurable

CPCON Fixed Asset Compliance Services

Our comprehensive service portfolio addresses every aspect of fixed asset compliance — from initial inventory through ongoing register management.

Baseline Asset Inventory

Complete physical verification of all fixed assets with barcode/RFID tagging, condition assessment, and location mapping.

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Asset Tagging & Identification

Standardized tagging programs using barcode, QR, or RFID technology linked to your ERP asset master.

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Asset Register Management

Ongoing register maintenance, reconciliation, and data quality management to keep your asset records audit-ready.

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Asset Componentization

Breaking complex assets into depreciable components per IAS 16 requirements for more accurate depreciation and impairment testing.

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Inventory Reconciliation

Matching physical inventory results against your fixed asset register and general ledger to identify and resolve discrepancies.

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ERP Data Compilation

Cleansing, standardizing, and migrating fixed asset data for ERP implementations, upgrades, or consolidations.

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Frequently Asked Questions

Common questions about fixed asset compliance, GAAP/IFRS standards, and how CPCON can help your organization.

Need Help With Fixed Asset Compliance?

Whether you need a compliance gap assessment, physical verification, or a complete fixed asset program overhaul, our team is ready to help. Tell us about your situation and we will respond within one business day.

+1 (201) 627-0005
contact@cpcongroup.com
80 Broad Street, 5th Floor, Manhattan, NY 10004
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Build an Audit-Ready Fixed Asset Program

Stop treating compliance as a year-end exercise. CPCON helps you build a continuous, technology-driven fixed asset program that satisfies auditors and protects your financial statements.

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