Glossary of Terms

This Glossary of Terms, provided for your reference, consists of accounting language used across RAM's website and commonly used in topics surrounding fixed asset management.


Depreciation is the allocation of an asset's purchase cost across its useful life relating to normal wear and tear. The term is most often used when referring to assets with a short, fixed service life. It spreads the purchase cost of an asset across several accounting years to better reflect the true profitability of an organisation.  

Fixed Asset Register

A Fixed Asset Register is an accounting tool used to store and manage an organisation's list of fixed assets (e.g. computer and office equipment, land, buildings, etc.), which consists of items held for the purpose of the production of goods or for performing services, not used for the purpose of sale. Put simply, a Fixed Asset Register is a list of fixed assets.

Fixed Asset Management

Fixed Asset Management is an accounting process used to monitor fixed assets for the purpose of financial accounting (depreciation). Many companies also elect to track the whereabouts, quantity, condition and maintenance records of fixed assets.

Sarbanes-Oxley (SOX)

The Sarbanes-Oxley Act of 2002, commonly referred to as SOX or Sarbox, is a United States federal law enacted in response to several major corporate accounting scandals. This legislation establishes enhanced standards for all U.S. public company boards, management and public accounting firms. The Act requires the Securities and Exchange Commission (SEC) to implement rulings on requirements to comply with the new law. In summary, SOX covers issues such as auditor independence, corporate governance, internal control assessment and increased financial disclosure.

The Turnbull Guidance

Originally published in 1999, the Turnbull guidance sets out best practice on internal control for UK listed companies. Its original objectives were to ensure that internal control and risk management were central to business processes and to enforce its regulations in such a way that organisations were granted a degree of flexibility in adopting them. The Turnbull guidance was then revised in October 2005 to reflect a number of new objectives.


GAAP - Generally Accepted Accounting Principles. GAAP is a standard structure of guidelines for financial accounting, most often used in the US, but also prominent in the UK.

CCA - Current Cost Accounting. CCA is a standard by which assets are valued and depreciated according to their current replacement cost rather than the cost at which they were purchased.

IAS – International Accounting Standards. IAS represent a number of regulations and guidelines formulated by the IASB with the intention of achieving internationally comparable financial statements.

ASB – Accounting Standards Board. The ASB is a body whose role it is to set accounting standards. The ASB also seeks to collaborate with international accounting standard-setting bodies in order to both influence the progress of International Accounting Standards (IAS) and to ensure that the standards it passes are in keeping with international developments.

HCA – Historic Cost Accounting. HCA is an accounting convention by which assets are valued and depreciated based on their cost at the point of purchase.

MHCA – Modified Historic Cost Accounting. MHCA is an accounting convention whereby certain assets are reflected at current values. MHCA is specific to the Central Government sector.

SORP – Statement of Recommended Practice. SORP provides recommendations for best practice accounting and reporting and, in particular, on the form and content of the financial statements of investment trust companies. SORP applies to a number of sectors, including Local Government, Charities and Housing Associations.

FT FreM – Foundation Trust Financial Reporting Manual. First published in January 2008, the FT FReM gives guidance to NHS foundation trusts regarding the production of their annual report and accounts.

FRS – Financial Reporting Standards. FRSs are accounting standards set by the Accounting Standards Board to ensure uniformity across accounting practices.

FRS11 – FRS11 is concerned with the impairment of fixed assets and goodwill. Its aim is to ensure a) that fixed assets and goodwill are recorded in the financial statements at no more than their recoverable amount, b) that any resulting impairment loss is measured and recognised on a consistent basis; and c) that sufficient information is disclosed in the financial statements to enable users to understand the impact of the impairment on the financial position and performance of the reporting entity.

IFRS – International Financial Reporting Standards. IFRS regulations dictate that financial statements provide uniformly adequate and transparent information regarding an organisation's financial performance for the purpose of international comparison.