What is capital expenditure and what does a CAPEX accountant do?

Capital assets (also referred to as ‘fixed assets’) are long lasting pieces of property used to generate revenue for the company. They can either be physical assets such as buildings, machinery, and equipment or informational ‘intangible’ assets such as intellectual property, patents and trademarks. The financial management of investment in the capital assets of a company is referred to as capital expenditure (CAPEX) Accounting

The main function of a CAPEX Accountant is to help companies determine what assets to capitalise (hold on the balance sheet rather than as an expense through the P&L), maintain an accurate and current fixed asset register and accurately calculate and post the appropriate depreciation and amortisation expenditure.

Key responsibilities

  • Devising and administering a company's capital asset programme
  • Performing regular audits
  • Preparing an annual budget outlining capital expenditure
  • Reporting to management on capital expenditure
  • Identifying important assets and tracking them
  • Identifying and calculating the acquisition value of assets
  • Identifying new assets for potential acquisition – based on practicality and profitability
  • Ensuring that capital projects are delivered within budget
  • Maintaining depreciation schedules

Why are they important?

Capitalisation and depreciation policies can have a significant impact on the profitability of any organisation, but is particularly relevant in larger or more capital-intensive businesses (for example telecommunications). In a capital-intensive business, accurate CAPEX accounting is integral as up-to-date records and the correct calculation of depreciation and amortisation can substantially impact the company’s profitability, reporting and tax position.

Skills needed for this role

Excellent numerical and analytical skills are important for this role, as is the ability to be highly organised. CAPEX accountants must also have strong attention to detail and good communication skills.

Strategic Professional Options examinations linked to this role

Advanced Performance Management

Advanced Audit and Assurance

Career opportunities presented by this role

CAPEX accountants are employed in a wide variety of industries. They are more frequently found in larger or more capital-intensive organisations although some work in governmental entities and even consulting firms.

Competencies

High level competencies required include:

  • Audit and assurance

    A. Advises on and communicates effectively the role and scope of audit and assurance engagements to relevant stakeholders.

    B. Applies regulatory, legal, professional and ethical standards relating to audit and assurance engagements.

    C. Plans and prepares for audit and assurance engagements.

    D. Performs effective audit, and assurance engagements.

    E. Reviews and reports on the findings of audit and assurance engagements.

    F. Guiding efficient and effective operations.

     

  • Corporate and business reporting

    A. Prepares financial statements, corporate financial and integrated reports for external stakeholders using appropriate technology.

    B. Leads effective decision making through analysing, evaluating and communicating performance and position of entities.

    C. Prepares financial statements for groups of entities using appropriate technologies.

    D. Monitors, critically evaluates, and advises on the relevant accounting standards, regulations, conceptual and financial reporting frameworks.

  • Financial management

    A. Links developments in global trade, markets, business practices and the economic environment to required improvements in the financial and risk management of an organisation.

    B. Advises on business asset valuations, capital projects and investments using appropriate analytical qualitative and quantitative techniques.

    C. Identifies, evaluates and advises on alternative sources of business finance and different ways of raising finance.

    D. Communicates and advises on the impact on financial decision making on current developments in regulation, governance and ethics.

    E. Assesses and advises on appropriate strategies to manage business and organisational performance regarding business and finance risk and effectively communicates the impact.