Managing Fixed Assets in a separate fund
Some organisations prefer to keep their Fixed Assets in a separate fund so that they can clearly identify their value when viewing overall fund balances.
Whilst this is not a requirement in fund accounting, if you'd like to set this up for your organisation, this article explains the steps you need to take when purchasing new Fixed Assets which are managed in a separate fund.
Pros and cons
There are some important points to consider before deciding whether to manage your Fixed Assets in a separate fund.
Pros
- This allows your Fixed Asset balance to not be part of your General fund. For example, if your organisation owned a £1 million building, putting this into a separate fund makes it easier to see your fund balances without the General fund being inflated by this Fixed Asset.
- Your Fixed Asset purchases will show as expenditure in fund that's covering the cost of the asset (and depreciation can happen in the separate fixed asset fund too).
- It's particularly helpful where restricted money is used to purchase the Fixed Asset. Whilst the money given for the purchase is restricted, typically once the asset is purchased, the asset itself is not considered restricted. Please see the 'Fixed Assets bought from restricted funds' section of this HelpGuide article for more information.
Cons
- This does require careful management to ensure that new Fixed Assets are recorded to the Fixed Asset fund, and corresponding transfers are added from the fund covering the purchase cost into the Fixed Asset fund. Otherwise you will find your Fixed Asset fund with either a positive or negative cash balance, and you will need to investigate where this has gone awry.
Setting up your Fixed Assets fund
If you create a new Fixed Assets fund, you'll need to add:
- a Fixed Asset category (to code Fixed Asset purchases to)
- an expenditure category (to code depreciation transactions to)
When you create a new fund, it will automatically have a fixed asset category.
To add/edit Fixed Asset categories, go to the Fixed Asset Category settings screen.
- Free Hold Property
- Plant & Machinery
- Fixtures & Fittings
- Office Equipment
- Computer Equipment
- Audio / Visual Equipment
Fund transfers
When you purchase a new asset or move an asset to a new fund, you will need to make a fund transfer (for the purchase value) from the fund in which your cash sits (used to purchase the asset) to the fund where the asset sits on ExpensePlus.
Otherwise, your fixed asset fund cash balance will become negative.
Moving existing Fixed Assets to a new fund
See this help guide article for guidance on moving Fixed Assets to a new fund.
Purchasing new Fixed Assets
These are the steps you should take when purchasing a new Fixed Asset:
- When the Fixed Asset is purchased, code the outgoing transaction to a Fixed Asset Category in the Fixed Assets fund (there will now be a Fixed Asset value in the Fixed Asset fund). This will temporarily make the cash balance of your Fixed Asset fund become negative.
- Make a fund transfer for the purchase value from the fund that is covering the cost of the fixed asset purchase. This will make the cash balance of your Fixed Asset fund return to zero.
Each year, code your depreciation for this asset to an expenditure category in the Fixed Assets fund (the value of the Fixed Asset will then decrease inside your Fixed Assets fund).
You can ask your Independent Examiner to talk you through the balance sheet implications of coding Fixed Assets to a separate fund if you are not sure if this is needed.
To help you better understand the Fixed Assets module as a whole, please visit the module overview page here.