Fixed Asset Componentization

Institutions with inaccurate historical cost and depreciation in their fixed asset records are vulnerable to disallowances or sanctions from federal agencies, resulting in possible reduction of indirect cost recovery. Meeting these strict financial reporting requirements is a challenging task.

American Appraisal helps higher education and research institutions, as well as hospitals and healthcare facilities, meet their financial reporting challenges. More than 60 of the top 100 research institutions in the United States benefit from our fixed asset management services, including building componentization. We provide the following services related to fixed asset componentization:

• Building Componentization
  • Building componentization studies assist research institutions in segregating building/renovation costs and depreciation on a component-by-component basis.
• Movable Equipment Inventory and Reconciliation
  • A complete fixed asset inventory and reconciliation of movable equipment ensures properly documented accounting records and helps identify assets that are no longer on hand.
• Lifing Studies
  • Our remaining useful life estimates conform with OMB Circular A-21 and help clients align their fixed asset accounting lives with regulatory guidelines.

In addition, American Appraisal provides componentization services to assist clients in complying with IFRS, specifically IAS 16.

What We Do

Buildings
American Appraisal will allocate building costs for buildings used in organized research. Our procedures involve inspecting the buildings and allocating project costs to components and subcomponents, including:

• The building structure, which includes framing, exterior walls, interior construction, roof and foundation costs, as well as allocated design and architectural fees
• Building service systems such as HVAC, electric, plumbing and elevators
• Fixed equipment such as laboratory benches, casework, fume hoods, environmental chambers and emergency showers/eyewash stations

Movable Equipment
During our inspection, we will inventory movable equipment with a unit cost over an institution’s selected capitalization rate and apply a bar code tag to facilitate the inventory. We will then:

• Reconcile the inventory to the fixed asset accounting records
• Estimate historical cost of unrecorded additions using standard or normal costing techniques
• Calculate the movable equipment’s accumulated depreciation and depreciation expense for the current fiscal year

Reporting
We provide the following reports for your A-21 reporting requirements:

• Property Accounting Summary for financial purposes (total and net of federal funds)
• Property Accounting Detail for financial purposes (total and net of federal funds)

Our reports include the following detail for each identified asset, where available and appropriate:

Why American Appraisal?
American Appraisal serves more than 60% of the nation’s top research institutions. We have extensive experience working with institutions and their auditors to meet financial reporting requirements and maintain accurate componentization records. We perform comprehensive research and due diligence to guarantee the accuracy of our reports and ensure that errors are not perpetuated.