XBert Type: Standard
Accounting Software: Xero
Country Restriction: All supported countries
Risk Type: Financial Reporting Risk
Business Function: Fixed Assets
Overview
The "Fixed Asset Account" XBert checks that the accumulated depreciation recorded in your fixed asset register agrees with the accumulated depreciation balance shown on your balance sheet. When the two do not match, your reported asset values and depreciation are out of step, which can distort your financial statements and your tax position.
What it does
For each accumulated depreciation account, this XBert adds up all the depreciation held in your fixed asset register (the current and prior depreciation on your active assets) and compares that total with the latest month-end balance for the same account on your balance sheet. If the two figures are different, it raises an alert so you can investigate.
How it works
XBert looks at each accumulated depreciation account that is linked to your fixed asset types and works out two figures, then compares them:
The register figure: the sum of current and prior depreciation across all of your registered assets, ignoring any asset that has been disposed of or deleted.
The ledger figure: the most recent month-end balance for that accumulated depreciation account on your balance sheet.
If those two figures do not match, the XBert fires for that account and shows you the difference. It is careful about when it runs and what it ignores:
It only runs when you actually keep fixed assets, that is, when you have a fixed asset type set up, at least one registered asset, and have purchased a fixed asset within the last two years.
Disposed and deleted assets are left out of the register total, so a normal disposal will not trigger it.
It compares against the latest month-end balance, not an older one, so an out-of-date balance will not cause a false alert.
If there is no balance-sheet figure to compare against, it does not raise an alert.
Example/Use Case
Jenny from Acme Appliances entered a bill for a new laptop intended for the store manager. Taking advantage of the instant asset write-off scheme, she accidentally coded the $1,850 purchase straight to the accumulated depreciation account instead of the correct fixed asset account. This pushed the balance sheet out of line with the fixed asset register, which still showed the original depreciation total. XBert spotted the $1,850 difference and raised an alert, so Jenny was able to recode the bill, bring the two records back into agreement, and keep her financial statements accurate.
Accounting software
This XBert runs on Xero, which provides the fixed asset register and depreciation accounts it relies on.
Which countries it supports
This XBert is available in all supported countries.
Processes
This XBert falls under Fixed Assets. To resolve it:
Open the accumulated depreciation account and review the transactions posted to it.
Look for entries that should have gone to a fixed asset account or to depreciation expense, such as a purchase or a manual journal coded to the wrong account.
Correct any miscoded transactions so the accumulated depreciation balance reflects only genuine depreciation.
Check that every asset is correctly registered and that depreciation has been run and posted for the period.
Confirm the register total and the balance sheet now agree, then mark the XBert as resolved.