Types of Plant Assets and Intangibles: A Government Example
The plant assets or fixed assets such as in a government organization include buildings and equipment such as large computers that manage tremendous databases (Kimmel, Kieso, & Weygandt, 2011). Most of an agency’s assets are divided amongst many different locations. Organization’s with several different locations or “plant sites” typically have their own accounting systems. As a result, the assets in a location are calculated but only for that particular site. Each plant site has its own financial data but only for the one plant site.
Integrating the relevant financial information from each site into one financial statement for the organization is difficult to achieve. The accounting programs used by each plant site are not easily integrated into one system nor are the accounting systems always compatible with each other. Internal controls are specific for each site but not company-wide. These individual internal controls taking the form of policies, plans, and procedures implemented by the organization to protect its assets and these can differ amongst locations.
Centralizing accounting to achieve the goal of having all of sites using the same accounting information system might seem wise but the problem with this situation is assets become unclear due to compartmentalization and divisions of missions.
Kimmel, P. D., Kieso, D. E., & Weygandt, J. J. (2011). Financial accounting: Tools for business decision making. Hoboken, NJ: John Wiley & Sons.
Vincent Triola. Sat, Feb 13, 2021. Plant Assets & Intangibles Retrieved from https://vincenttriola.com/blogs/ten-years-of-academic-writing/plant-assets-intangibles