This white paper will discuss how to keep accurate fixed asset records while complying with applicable tax laws and regulations for acquiring, depreciating, and disposing of assets.
In 2002, Congress passed new regulations designed to improve corporate governance of public corporations and reduce fraudulent corporate financial reporting. The US Public Company Accounting Reform and Investor Protection Act of 2002, commonly referred to as the Sarbanes-Oxley Act, hopes to rebuild investor confidence in public corporations after the wave of high publicity corporate accounting scandals that began with the Enron crisis.
The Sarbanes-Oxley Act places new burdens on corporations, imposes strict penalties for non-compliance, and holds CEOs' and CFOs' personally responsible for the accuracy of their financial reporting. Section 404 of this act requires a corporation to report on the effectiveness of their internal controls and requires an external auditor to attest to this statement. Consequently, corporations must now document their internal control structure and evaluate its effectiveness to ensure the accuracy of financial data. Compliance with Sarbanes-Oxley includes paying particular attention to IT systems that can impact financial record-keeping and reporting.
Compiling an accurate financial picture of a company requires accurate fixed asset records as well as compliance with applicable tax laws and regulations for acquiring, depreciating, and disposing of assets.
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