For most public entities, capital asset accounting and financial reporting are extremely challenging tasks. Obtaining information necessary to properly record, reconcile and support asset values and financial reporting functions requires coordination from across the organization, and often involves multiple software systems and databases. Among the many consequences of COVID-19 are the financial reporting challenges associated with attempting to inventory and account for recently purchased capital additions, retirements, and project postponements or cancellations.
As we look back at the beginning stages of the coronavirus outbreak, social distancing measures came upon us all very quickly. We would expect to see equipment either left in vacated buildings or taken home to our new temporary offices. This shift in work environments would then affect sensitive and capital equipment items necessary to perform our duties. There are many vulnerabilities being exposed right now through sensitive equipment being distributed remotely. Specifically, prevention of data loss or data breaches in an environment where you are relying on physical safeguards in everyone’s homes. Additionally, a significant number of federally titled equipment under your stewardship may have been distributed to healthcare facilities (PPE, ventilators etc.). This presents added risk to safeguarding equipment under your administration. Accurate data and valuations are critical for internal controls, compliance and prospective expenditure planning. The only way to know what steps you should take next is by having the right data.
Capital asset accounting frequently receives a lower level of priority within the organizational structure. This should not be one of those times as movement and the possible addition of federally titled equipment items will compound the complexity of physical inventory counts. Consideration should also be given to control sensitive item inventories as this information, along with building space data, will prove to be very useful tools in the decision tree. As the economy begins to reopen, we will all need processes for new norms. These include “structural distancing” already seen at many checkout counters with plexiglass between cashier and customer, limited staff counts, and limitations in rooms/space square footage measurements to conform to social distancing mandates. Data-driven results are the key to help keep everyone focused during these unpredictable times.