‍ Inventory of Fixed Assets – When Should It Be Conducted?

One of the key legal acts to consider when running a business is the Accounting Act. It imposes on entrepreneurs the obligation to conduct periodic physical inventories of fixed assets. This obligation applies to taxpayers who are required to keep accounting records in the form of bookkeeping (accounting books). Below, we have gathered information about what the inventory of fixed assets is, as well as when and how often it should be carried out in a company.

What Is the Inventory of Fixed Assets?

When the inventory of fixed assets is conducted in a company, all accounting department employees must be prepared to accurately and thoroughly present the actual state of the assets. All this information should be recorded in inventory sheets.

The Accounting Act, as well as other legal regulations regarding inventory, do not specify exact fields that an inventory sheet must contain. However, it must be permanently numbered and marked, and should include essential data such as the symbol and name of the asset, as well as its quantity.

‍

Article 27, paragraph 1 of the Accounting Act contains a specific recommendation regarding the inventory of fixed assets, emphasizing the need to properly document it and to link it with the records found in the accounting books resulting from the inventory of fixed assets. Paragraph 2 of this Act states that differences between the actual condition and the condition shown in the accounting books must be settled in the accounting books of the financial year during which the inventory was performed. The identified differences are classified as shortages or surpluses. The inventory of fixed assets cannot be signed by the unit manager until it is properly described by the inventory commission using the so-called difference protocol. All shortages, surpluses, and damages must be recorded in the balance sheet records no later than the last day of the financial year.

How often should fixed assets inventory be conducted?

On the Internet, there is a lot of information about when the fixed assets inventory should be performed and how often it should be prepared. However, it often happens that information found online does not fully correspond to what is stated in the Accounting Act. Various websites provide incorrect information, for example, that fixed assets inventory should be conducted every 5 years. Each company must develop its own system for recording assets and, depending on the type of assets, follow generally accepted principles and rules for preparing such documentation.

By the way, it is worth making a small clarification that according to the Act and Article 26 paragraph 1, fixed assets inventory must be carried out once a year, on the last day of the financial year. This is done by physical stocktaking. How often the fixed assets inventory should be conducted depends on many factors, as there are certain exceptions. For example, conducting fixed assets inventory every 4 years applies to: real estate classified as fixed assets, investments located in secured areas, other fixed assets, machinery, and equipment included in fixed assets under construction. This example is supported by the Accounting Act – Article 26 paragraph 3, point 3. How often fixed assets inventory is carried out also depends on the type of assets. The Accounting Act specifies the deadlines for mandatory inventories for different groups of fixed assets.

How to count 4 years for fixed assets inventory

If the company adopts the principle of conducting fixed assets inventory once every 4 years, certain rules must be followed. The most important issue is timing. In the case of conducting inventory every 4 years, it should take place on the last day of the financial year. The verification method is then applied, which occurs during the physical stocktaking of the remaining fixed assets. This tactic is used for assets that are, for example, difficult to access. For this reason, commercial books are used, and their records are compared with other documents to verify the value of the components.

‍

‍