Fixed Asset Counting (#196)
/In this podcast episode, we discuss the methodology for a fixed asset counting process. Key points made are noted below.
Which Fixed Assets to Count
It’s not absolutely necessary to count fixed assets. In many companies, this is a fairly informal search for just the more expensive assets.
It takes a lot of time to track down every fixed asset, which may not be a productive use of staff time. Instead, focus on just those assets that are more likely to move around. Consider flagging assets that are a combination of movable and really expensive. Then search for these items once or twice a year to verify their locations. This reduces the total fixed asset count work by around 80%.
Who Should Count Fixed Assets
You could shift the counting task over to the maintenance staff, since they can also provide information about the condition of the equipment. Or, have the IT staff count computer equipment.
When to Count Fixed Assets
Schedule the count just before the annual budgeting process, so that any fixed assets flagged for maintenance problems can be included in the capital budget for replacement.
Assign Responsibility for Fixed Assets
Have a program for replacing laptops at regular intervals, and use a policy of giving the old laptop to the employee as soon as a new one is purchased. That means the staff will take good care of their laptops, since they will be the future owners.
Assign each fixed asset to one of the department managers. When they take over a department, they formally sign for every fixed asset in their department. From that point on, they are responsible for all of these assets. If you include the results of a fixed asset review in their performance reviews, they’ll probably take good care of their assets.
Tracking of Fixed Assets
When shifting assets between departments, the department it is leaving needs to file an asset transfer form with the accounting department, which should be verified by the receiving department.
Up-to-the-minute tracking can be accomplished with active or passive radio frequency identification tags. An active tags sends out a ping that is picked up by a tracking system. This is an expensive approach, but can be useful for assets that are used in multiple locations.
Fixed asset counts are a detective control, so they will not prevent assets from being stolen.