Conducting fixed asset audits on a routine basis is important for the bottom line of every nonprofit organization. The details of that audit matter, too, which is why a nonprofit’s fixed asset audit schedule is something managers need to take into consideration. How often you conduct those audits is up to you, but an annual audit is a good place to start.
The Devil’s in the Details
The details of your audit also are highly customizable depending upon your needs as an organization. Your primary objective is to complete your audit and compare it to your last audit. Any differences between the two should correspond with what you have on your balance sheets. Additionally, you’ll want to compare your current and previous audits to ensure the accuracy of asset valuations, classifications, lease/purchase information and more.
If you’ve lost any assets due to carelessness or theft, an audit will reveal that information. If a fixed asset is damaged but hasn’t been reported as such, once again, the audit will bring those damages to your attention. An audit also will bring to light any ghost assets, which can be a drain on your bottom line. Sticking to a regular fixed asset audit schedule is one of the smartest steps you can take as a nonprofit organization to ensure you know exactly what you own, what kind of condition those fixed assets are in, and where those items are located. Best of all, keeping a fixed asset audit schedule helps nonprofits stretch their resources by maximizing the lifespan of their assets. They’re also able to avoid making decisions – for example, creating an equipment refresh schedule — based on guesswork or outdated information.
After you’ve determined your fixed asset audit schedule, these are the general steps you’ll follow:
1. Organization of your fixed asset audit: Will you conduct your audit on a broad, organization-wide basis? Or will you separate it by location or department?
2. Collect asset records: Create a list of all of your assets. Depending upon how well you’ve kept up with this information, your audit ultimately may reveal that you’re missing some items, or that some of the assets on your list aren’t functional anymore. Nevertheless, this is your starting point.
3. Review regulations. Does your organization have designated regulations for conducting audits, and/or is there an external entity that has created auditing guidelines? If so, review them.
4. Determine your audit goals. If this is your first audit, or if your practices have been inconsistent in the past, your goal may simply be to ensure that every one of your fixed assets is accounted for correctly.
5. Review your results and plan for any necessary corrections.
Common mistakes your audit might reveal include missing asset tags, missing identification (make/model/serial number), missing documentation of an asset’s movement (including internal transfers and disposal), and incorrect depreciation calculation.
The sooner you can identify and correct these issues, the better – and the most reliable way to do so is through an asset tracking platform. Blogger Jay Schofield (“How to Improve Your Business Fixed Asset Auditing Process”; Oct. 27, 2015) explains why: “An automated system that eases the auditing process reduces the labor hours needed to conduct regular and year-end audits, [and] for some companies, hours are cut by the thousands. This allows employees to use their time more wisely and makes them of more use to the company, while massively reducing the number of errors that a manual system practically ensures (studies show that nearly 90 percent of spreadsheets with more than 150 rows have ‘significant errors.’).”
Asset Panda enables nonprofits to conduct mobile audits quickly and easily using the smartphones employees already carry. With a built-in scanner and cloud synchronization, Asset Panda eliminates the need for additional hardware and delivers real-time data 24 hours a day.
To learn more, visit assetpanda.com
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