WHY SHOULD YOU REGULARLY CONDUCT A FIXED ASSET AUDIT?
Fixed assets have a substantial influence on your business’ balance statements. Not having an updated record of all your fixed assets will cost your company thousands of dollars every year. The fact that you are not constantly auditing your company’s fixed assets increases the chance for employee theft, misplacement, loss, and undocumented damages that affect your asset’s value. Fixed assets’ value is based on age, working and cosmetic condition, and if it is still under warranty or not. In addition to having a list of every asset your company owns you must also record important information such as serial numbers, date of purchase, repair and service completed.
Without accurate asset records, your financial balance sheets will be incorrect, losses may occur, or necessary assets may not be available when needed. Routine audits ensure that your company’s financial statements do not contain any inconsistency. Consequently protecting you and your business in the case of external audits. Regularly auditing your fixed assets will assist with identifying discrepancies, isolating errors, and keeping your company compliant with regulations. Mobile fixed asset audit allows your company to perform such an important task at any time and from anywhere. Your employees will have the means to run audits regularly from the field, which in turn increases overall accountability and transparency across your entire organization.
STEPS IN A FIXED ASSET AUDIT
- Decide on a starting point: Organize how to conduct your fixed asset audit. Will you separate your audit by location, department, or will it be a widespread audit across your entire company?
- Gather your assets’ records: Once you have devised a plan of action, gather a comprehensive list of all of your assets.
- Reassess regulations. Review internal and external procedures and regulations for conducting audits.
- Determine audit goals. For example, ensure that every fixed asset is accounted for and it’s properly recorded and valued. However, if your tracking process has been negligent in the past, you should first conduct a manual fixed asset audit to account for all of your assets. A manual fixed asset audit will provide a starting point for better reporting in the future.
- Review and account for inconsistencies. The final report will uncover problematic areas such as ghosts assets, damaged assets, and assets that are no longer usable and need to be disposed.
COMMON MISTAKES WHEN TRACKING AND MANAGING FIXED ASSETS
Regularly conducting fixed asset audits provide a clear picture of your business that oftentimes is overlooked. Once you and your company develop the habit of conducting regular audits, you will be able to make adjustments to spending and how to manage and support your fixed assets proactively rather than reactively. However, internal controls are not usually implemented for a number of other fixed asset transactions. Some examples of mistakes when tracking and managing fixed assets:
- Insufficient asset descriptions: missing manufacturer, model, and serial number information
- Lack of proper property identification tags – For example, barcodes
- Insufficient documentation of asset movements including possession, transfers, and disposal
- Incorrect depreciation calculation
- Irregular or no recurrent physical inventory and reconciliation
CONDUCTING FREQUENT AUDITS USING A FIXED ASSET TRACKING AND MANAGEMENT SYSTEM
- Guarantees accuracy by tracking your assets every step of the way – location, check-ins and check-outs, transfers, and disposal. Every time an asset is managed that transaction must be tracked.
- Hint: Use barcode tags to simplify your tracking process. Simply scan the barcodes within a location and let the fixed asset tracking system do the data analysis
- Detailed records guarantee your audit will run effortlessly because it will be completed quickly and efficiently, since you will not have spent most of your time and resources addressing inconsistencies.
- Efficient asset tracking systems must include the use of mobile devices; allowing you to conduct an audit from anywhere, at any time.
- Investing in a fixed asset tracking system is the first step in creating accurate fixed asset records. Conducting regular audits guarantees the validity of your financial records and prevents unnecessary spending and losses.
ASSET PANDA’S SOLUTION
One of Asset Panda’s most effective features is its ability to conduct fast and easy fixed asset audits using mobile devices. The audit function of the iOS and Android apps allows users to conduct onsite audits via barcode scanning. It automatically updates location and area information and generates audit exception reports. The audit function is found in the app’s tools menu. For more information on how to conduct a mobile audit with your Asset Panda mobile app, check out our user guide.
Check out our next blog post on fixed asset depreciation and how it impacts your business balance sheet.