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EVENT | December 9, 2026
CFO Roundtable: Prepare your financial institution for 2027 and beyond
Staying compliant today requires looking ahead to the regulatory and reporting expectations of tomorrow. Join us from 12:30-2:00 pm CT on December 9 for the CFO Roundtable, a forward-looking learning opportunity for chief financial officers, chief risk officers and other accounting leaders. This two hour session will provide strategic clarity on key audit, accounting and tax developments to help your institution prepare for 2027 and beyond. Proactively preparing for change helps your institution maintain a competitive advantage. Join us for the context and practical guidance needed to lead your team with clarity and confidence. Save your seat today.
ARTICLE
A guide to fixed asset accounting
Fixed assets represent some of the largest investments on a company’s balance sheet, and how you account for them directly affects financial reporting accuracy, audit readiness and the reliability of key performance metrics. From initial capitalization to depreciation, impairment and disposal, each stage of the fixed asset life cycle carries distinct accounting requirements under GAAP. Keep reading for an in-depth guide to fixed asset accounting best practices. What is fixed asset accounting? Fixed asset accounting is a crucial aspect of financial management that deals with tangible assets, also known as property, plant and equipment (PP&E). These assets, which appear on the balance sheet, cannot be easily converted into cash. The term “fixed” indicates that these assets will not be used up, consumed or sold in the current accounting year. Understanding what fixed asset accounting entails is essential for businesses, as virtually all companies have a fixed asset investment. Fixed assets are used in the production of goods and services for customers. This investment can range from a single laptop to a fleet of trucks, an entire manufacturing facility or an apartment building for rent. The fixed asset life cycle, from acquisition to disposal, plays a significant role in a company’s financial statements and overall financial health. Fixed asset accounting do’s and don’ts Here is a short list of fixed asset accounting do’s and don’ts with detailed explanations: Do: Consider all costs at the time of acquisition or construction, including capitalization of sales tax on fixed assets and freight costs. Adopt a fixed asset capitalization policy with a clear capitalization threshold. Estimate useful life for depreciation based on an asset’s estimated service life. Consider whether the asset will have value at the end of its service life, then base depreciation on cost, less estimated salvage value. Reevaluate estimates of useful lives of assets on an ongoing basis. Keep asset depreciation records in sufficient detail so they can be accurately tracked when physically moved and/or disposed of. This includes maintaining a fixed asset schedule and performing regular fixed asset roll-forwards. Consider asset impairment when significant events or changes in circumstances occur. Be aware of changes forthcoming with new lease accounting standards, particularly regarding right-of-use assets. Don’t: Expense costs such as sales tax or freight incurred on a fixed asset purchase, as these can typically be capitalized. Use depreciable lives based on IRS rules for financial reporting purposes. Ignore changes in an asset’s use or service; you may need to consider asset impairment. Automatically depreciate a leased asset over its useful life; consider lease accounting to determine proper life. Forget to consider insurance recordkeeping requirements when recording and tracking fixed assets. Fixed asset accounting rules and policy For most businesses, fixed assets represent a significant capital investment, so it’s critical that the accounting be applied correctly. Here are some key facts to understand and insights to keep in mind: Fixed assets are capitalized: That’s because the benefit of the asset extends beyond the year of purchase, unlike other costs, which are period costs benefitting only the period incurred. Understanding what it means to capitalize an asset is crucial for proper fixed asset accounting. Fixed assets should be recorded at the acquisition cost: Cost includes all expenditures directly related to the acquisition or construction of and the preparations for its intended use. Such costs as freight, sales tax, transportation and installation should be capitalized. Adopt a capitalization policy establishing a dollar amount threshold: Fixed asset costs below the threshold amount should be expensed. This is part of the criteria for capitalization of fixed assets. Assets constructed by the entity should include all components of cost: This includes materials, labor, overhead and interest expense, if applicable. Capitalize additions that increase the service potential of the asset: Additions better categorized as repairs should be expensed when incurred. Capitalizing fixed asset costs for software Capitalized costs for software consist of: The fees paid to third parties to purchase and/or develop software. Fees for the installation of hardware and testing, including any parallel processing phase. Costs to develop or purchase software allowing for the conversion of old data are also capitalized. However, the data conversion costs themselves are expensed as incurred. Training and maintenance costs, which are often a significant portion of the total expenditure, are expensed as period costs. Upgrade and enhancement costs should be expensed unless it is probable they will result in additional functionality. Capitalized costs Expensed costs · Fees paid to third parties for purchase or development · Hardware installation and testing fees · Software used to convert old data · Data conversion costs · Training · Maintenance · Upgrades and enhancements When an organization purchases software from a third party, the purchase price may include multiple elements, such as: Software training costs Fees for routine maintenance Data conversion costs, reengineering costs Costs for rights to future upgrades and enhancements Such costs should be allocated among all individual elements, with allocations based on objective evidence of the fair value of the contract elements, not necessarily the separate prices for each element stated in the contract, and then capitalized and expensed accordingly. GAAP includes specific guidance for accounting for the costs of computer software purchased for internal use. The ins and outs of asset depreciation Depreciation is the process of allocating the cost of the asset to operations over the estimated useful life of the asset. For financial reporting purposes, the useful life is an asset’s service life, which may differ from its physical life. An asset’s estimated useful life for financial reporting purposes may also be different than its depreciable life for tax reporting purposes. Furthermore, the objectives of financial reporting and tax depreciation are different; generally, tax methods and lives take advantage of rules that encourage investments in productive assets by permitting a faster write-off, whereas depreciation for financial reporting purposes is intended to match costs with revenue. The service life for financial reporting is an estimate made by management, considering some of the following factors: Type of asset Condition when purchased: new or used Past experience Expected usage: normal or excessive Expected obsolescence The service life may be based on industry standards or specific to a business, based on how long the business expects to use the assets in its operations. Certain assets may be used until they are worthless and are disposed of without remuneration, while others may still have value to the business at the end of their service life. If an asset will have a residual value at the end of its service life that can be realized through sale or trade-in, depreciation should be calculated on the cost less the estimated salvage value. Real-world depreciation scenario Most businesses use five years as the useful life for automobiles. In practice, a particular business may have a policy of purchasing and trading in automobiles every three years. In this case, three years, not five, should be the estimated useful life for depreciation, but the trade-in value must be estimated and used in the calculation of depreciation (the cost, less the estimated salvage value, should be depreciated over the three-year service life to the business). As with all accounting rules, materiality should be considered in determining whether the recognition of residual values is needed. While the straight-line method is the most commonly used depreciation method, other methods such as units of production, sum of the years’ digits and declining balance (including the double-declining balance method) exist. As estimates, useful lives should be evaluated during an asset’s life, and changes should be made when appropriate. Changes in estimates are accounted for prospectively. Net fixed assets and the fixed asset turnover ratio The net fixed assets formula is a crucial concept in fixed asset accounting. Net fixed assets are calculated by subtracting accumulated depreciation from the original cost of all fixed assets. This figure appears on the balance sheet and is used in various financial analyses, including the calculation of the fixed asset turnover ratio. The fixed asset turnover ratio is a measure of how efficiently a company uses its fixed assets to generate sales. It’s calculated by dividing net sales by average net fixed assets. This ratio is particularly useful for companies with significant investments in property, plant and equipment. Impairment testing best practices for accounting Fixed assets should be tested for impairment individually, or as part of a group, when events or changes in circumstances indicate an asset’s carrying value may exceed its gross future cash flows. Such circumstances include the following: A significant decrease in the market price of the asset A significant adverse change in the degree or manner in which the asset is being used Significant deterioration in the asset’s physical condition An accumulation of costs significantly exceeding the amount originally expected for the acquisition or construction of the asset An operating loss in the current period and a history of losses indicate that future ongoing losses associated with the use of the asset will occur Keep in mind that impairment accounting applies when a significant asset, or a collection of assets, is not as economically viable as originally thought. Isolated incidents when a particular asset may be impaired are usually not material enough to warrant recognition. In those cases, a change in an asset’s estimated life for depreciation may be all that is needed. Impairment is typically a material adjustment to the value of an asset or collection of assets. It is, in essence, an acceleration of depreciation to account for the lower future benefits to be received from the asset. The charge for impairment is recorded as part of income from operations in the same section of the income statement as depreciation. Fixed assets accounting entries and journal entry examples Understanding fixed assets accounting entries is crucial for proper financial reporting. Here are some fixed asset journal entry examples: Acquisition of a fixed asset: fixed asset cash or accounts payable Recording depreciation: depreciation expense accumulated depreciation Sale of a fixed asset: cash accumulated depreciation fixed asset gain on sale of asset (if applicable) Asset disposal: accumulated depreciation loss on asset disposal (if applicable) fixed asset These entries help maintain accurate records in the fixed asset schedule and facilitate the fixed asset roll forward process. If your business leases fixed assets Not all fixed assets are purchased by a business. Most businesses use both purchasing and leasing to acquire fixed assets. Under current accounting rules, assets under capital leases are capitalized by the lessee. Depreciable lives of assets under capital leases are generally the asset’s useful life (for leases with a transfer of ownership to the lessee at the end of the lease) or the term of the related lease (for all other capital leases). Leases of real estate are generally classified as operating leases by the lessee; consequently, the leased facility is not capitalized by the lessee. However, improvements made to the property — termed leasehold improvements — should be capitalized when purchased by the lessee. The depreciation period for leasehold improvements is the shorter of the useful life of the leasehold improvement or the lease term (including renewal periods that are reasonably certain to occur). The current FASB standard for lease accounting is ASC 842 (Leases). This standard was issued to improve financial reporting about leasing transactions and requires organizations that lease assets (referred to as “lessees”) to recognize on the balance sheet the assets and liabilities related to the rights and obligations created by those leases. Accounting solutions for fixed asset management Maintaining complete and up-to-date fixed-asset records isn’t easy, and if you are preparing for an audit, fixed-asset management can be an intimidating prospect. But it doesn’t have to be. Professional accounting firms are ready to partner with you to help ensure accuracy in the accounting of your fixed assets. Understanding fixed asset accounting, from initial recognition to depreciation and eventual disposal, is crucial for accurate financial reporting. By following GAAP fixed asset capitalization rules, maintaining a detailed fixed asset schedule, and regularly performing fixed asset roll forwards, businesses can help ensure their balance sheet and income statement accurately reflect their fixed asset investments and related expenses. Read more 5 signals your capital deployment strategy is out of sync with your business Capital allocation performance self-check: 5 questions leadership teams should ask before committing additional investment Why FP&A is essential for business growth and profitability
ARTICLE
What is a safe harbor 401(k), and can your business benefit from one?
Are you wondering how to set up a 401(k) retirement plan that better fits your small business? Have nondiscrimination testing and low employee participation restricted your ability to save contributions in your traditional 401(k)? Electing safe harbor status may be able to help small business owners and their highest-paid workers save more. Let’s explore what safe harbor means for 401(k) plans and how it can enhance your retirement savings strategy. What is a safe harbor 401(k)? Safe harbor 401(k) plans are a special type of 401(k) that can benefit small businesses. By waiving certain IRS compliance requirements, safe harbor 401(k) plans make it much easier for owners and highly compensated employees to maximize contributions to their 401(k) plan. This type of plan design offers significant advantages over a traditional 401(k), especially for middle-market or small businesses. While there are added benefits, there are also requirements associated with such plans to take into consideration. Understanding both will help ensure your business makes an educated choice in whether to implement a safe harbor 401(k) plan. The traditional 401(k) vs. the safe harbor 401(k) In many ways, the traditional 401(k) plan and a safe harbor 401(k) plan are similar. Both are types of 401(k) plans where employees can contribute dollars from their paycheck and choose from a list of investment options to help grow their retirement account. However, there are several key differences. First, safe harbor 401(k) plans are not subject to all of the same IRS nondiscrimination tests that standard 401(k) plans are. The actual deferral percentage (ADP) test, actual contribution percentage (ACP) test and top-heavy test are designed to help ensure owners or highly compensated employees (HCEs) are not receiving an unproportionally large benefit compared to non-highly compensated employees (NHCEs). When a company fails these tests, it must take corrective action, often by distributing excess contributions to the owners and HCEs (a taxable event) or by making a non-elective contribution to all NHCEs. Low contribution and participation rates from NHCEs can make it difficult to pass these tests and therefore directly limit how much owners or HCEs can save in a traditional 401(k). Electing safe harbor status allows companies to generally avoid these testing requirements, meaning owners and HCEs can save as much as they’d like (subject to the annual IRS contribution limits), without fear of receiving corrective distributions at the end of the year. This is especially beneficial for small businesses, which may not have a large number of NHCEs to offset the contributions of ownership. 401(k) type Traditional 401(k) Safe harbor 401(k) Investment options Choose from a list of investment options Choose from a list of investment options IRS nondiscrimination testing Subject to ADP, ACP and top-heavy tests Generally exempt from ADP, ACP and top-heavy tests HCE/owner contribution limits Restricted by NHCE participation and contribution rates Owners and HCEs can contribute up to the annual IRS maximum Corrective action risk Required if tests are failed (e.g., refunds to HCEs or employer contributions to NHCEs) Largely eliminated by meeting safe harbor requirements Mandatory employer contributions Not required Required annually (non-elective or matching) Vesting on employer contributions Employer may impose a vesting schedule Safe harbor contributions must be 100% immediately vested Best suited for Larger businesses with broad, active NHCE participation Small to mid-size businesses with limited NHCE participation Safe harbor contributions: A key requirement In exchange for this benefit, a company with a safe harbor 401(k) is required to make annual employer contributions to eligible employees. These mandatory safe harbor contributions must be fully vested immediately. This means an employee will never forfeit any safe harbor contributions upon separation, regardless of their years of service. (Note that you can still implement a vesting schedule on any employer contributions made in addition to the safe harbor employer contributions). The required employer contribution can come in one of two forms: Non-elective contribution All eligible employees must receive an employer contribution of at least 3% of their compensation, regardless of how much the employee saves from their own paycheck. If an eligible employee does not contribute at all, they are still entitled to the 3% employer contribution. Matching contribution This safe harbor option requires the company to provide an employer contribution only to eligible employees who elect to contribute to the plan through payroll deductions. These employee contributions are referred to as employee elective deferrals. There are three matching contribution types: Basic safe harbor match: This is an employer dollar-for-dollar matching contribution on elective deferrals on the first 3% of the employee’s compensation plus a 50% matching contribution on elective deferrals on the next 2% of employee’s compensation. Employee elective deferral Required employer match 0% 0% 1% 1% 2% 2% 3% 3% 4% 3.5% 5%+ 4% Enhanced safe harbor match: This employer matching safe harbor contribution is the simplest option. It’s a dollar-for-dollar match on elective deferrals of at least the first 4% of the employee’s compensation. This can be increased to a dollar-for-dollar match on elective deferrals up to a maximum of 6% of compensation. Employee elective deferral Required employer match 0% 0% 1% 1% 2% 2% 3% 3% 4% 4% Automatic safe harbor match: This safe harbor matching structure is unique in several ways. It provides for a dollar-for-dollar matching contribution on elective deferrals on the first 1% of compensation and a 50% matching contribution on elective deferrals on the next 5% of compensation. At the maximum elective deferral of 6%, it provides for a 3.5% matching contribution. This formula requires the employer to use an automatic enrollment feature, which automatically deducts a stated percentage (generally 3%) from an employee’s paycheck if an election is not made (without their consent — but with disclosure provided that allows them to opt out of the automatic payroll deduction). Additionally, this is the only safe harbor contribution option that allows for a vesting schedule of up to two years. Employee elective deferral Required employer match 0% 0% 1% 1% 2% 1.5% 3% 2% 4% 2.5% 5%+ 3% 6%+ 3.5% Benefits of safe harbor 401(k) plans While safe harbor 401(k) plans require mandatory employer contributions annually, they offer several advantages: Maximized savings: They help ensure owners and highly compensated employees can fully participate in the beneficial income tax and retirement savings strategies that make 401(k) plans so popular. Simplified administration: It greatly reduces administrative complexity and employer involvement through streamlined processes. Employee retention: The guaranteed employer contributions can be a powerful tool for attracting and retaining talent. Financial wellness: By encouraging participation and providing employer contributions, safe harbor plans can improve the overall financial wellness of employees. Tax benefits: Employers can deduct their contributions, and employees benefit from tax-deferred growth. Profit sharing: Safe harbor plans can be combined with profit-sharing features for additional flexibility. Is a safe harbor 401(k) right for your business? If you’re interested in learning more about safe harbor 401(k) plans or getting started with one, consider consulting with a third-party administrator or financial advisor . They can help you determine whether a safe harbor 401(k) plan is a good choice for you and your business, which contribution type may work best for your situation and how the safe harbor plan works in concert with your business and personal retirement goals. Remember, the right plan design can make a significant difference in your ability to save for retirement while providing valuable benefits to your employees. Whether you choose a traditional 401(k) or a safe harbor 401(k), the key is to start planning for your financial future today. Read more The complete guide to Roth IRA and Roth 401(k) conversions What you may be getting wrong in overtime calculations Transforming payroll for exponential expansion
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Assurance services FAQ
Assurance services are professional services that help organizations maintain compliance with audit requirements and accounting standards, adhere to contractual obligations and identify potential risks.
With the right assurance support, organizations can improve compliance and provide transparent, accurate information to decision-makers and stakeholders.
Wipfli’s assurance services include:
- Financial assurance services, including financial statement audits and reviews
- Single audits and Uniform Guidance
- Internal audits
- Employee benefit plan audits
- SOC audits
- Other attestation services
- Accounting assurance services for areas including technical accounting, financial planning and analysis, financial statement compilation and preparation assistance, IPO and audit readiness
- Outsourced finance and accounting services
If you know an audit is on the horizon, Wipfli can also help you prepare. We offer audit readiness services to help ensure your financials meet the required standards and provide peace of mind before the process begins.
Our team can augment your existing staff during preparation, giving you the extra support you need. And when readiness is complete, Wipfli can seamlessly transition to performing the audit itself, creating a smoother experience from preparation to reporting.
Wipfli incorporates technology into our assurance process to help deliver audits that are efficient and offer deeper insight into your operation.
We leverage technology to help automate and customize your audit experience, as well as give you access to valuable data and collaborate in real time. We can also perform paperless audits, allowing us to reduce the amount of paperwork needed in your audit and make the process easier for your teams and ours.
Wipfli has experience supporting organizations in a wide range of industries, including financial services, financial institutions, nonprofits, construction, healthcare and manufacturing.
Our technical accounting services provide the specialized knowledge you need to maintain GAAP compliance and address complex requirements with confidence. From navigating new lease guidance to delivering robust financial planning and analysis, we help you stay ahead of evolving, industry-specific standards.
We also offer international tax services — including international tax consulting, compliance and reporting — to help you navigate
multinational tax and financial reporting challenges
The duration of the audit process depends on several factors, including the size of your organization and the exact audit services proposed.
Wipfli knows that for many organizations, complex, time-consuming audits can make meeting compliance while minimizing disruption uniquely challenging. Our audit process is designed to be efficient and mindful of your team’s workload.
Our team strives to respect your team’s capacity, planning a strategic audit timeline and often performing preliminary testing on certain accounts and transactions early so that you can stay focused on high-value work.
To deliver services effectively, we also collaborate closely with your key financial leaders so that questions are answered and support is provided without unnecessary disruption.
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