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,” at:


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