March 25, 2021
Internal Audit Procedure for Fixed Assets
Educational institutions of all sizes and affiliations rely on fixed assets to deliver the best quality learning experience to their students. If you’ve never conducted an audit of your fixed assets, you might be wondering what the internal audit procedure for fixed assets should be for your organization.
An Important, Yet Forgotten Function
Surprisingly, fixed asset audits are often forgotten by educational institutions and others. “Often an element of fraud and financial misstatement, fixed assets get no respect,” says New York-based consultancy firm Duff & Phelps in a whitepaper entitled “Fixed Asset Controls and Reporting: Who’s Paying Attention to Your Largest Assets.” Released in 2017, the report asserts that “while many organizations never perform an inventory of current fixed assets and corresponding reconciliation, these tasks provide an essential internal control for the financial reporting of fixed assets.”
Accurate financial reporting is a must for any organization, but educational institutions rely on it for grant funding. Schools can avoid discrepancies and other costly errors by establishing an internal audit procedure for fixed assets. There’s no need to wait; you can start now by taking a few proactive steps.
First, be vigilant about keeping all documentation related to your fixed assets, starting from the time of purchase or lease. If the fixed asset has a warranty, ensure that you have a copy in your files along with its insurance policy. You may tell yourself that you’ll take care of recording these details later, but taking the time to gather this information now will save you a lot of stress in the future.
Next, start small – conduct a manual audit of a single department or even an individual classroom. Create an inventory of every fixed asset in that subsample, then compare it with your records to see if any gaps or errors exist. If your educational institution already has fixed asset management policies in place, your sample will give you an idea of how well those recommended procedures are being followed by employees.
Then broaden your sample. If you identified any issues in your subset, are they indicative of a larger problem? Take immediate action to correct what you can. For example, if your analysis uncovered fixed assets that aren’t properly tagged, you can address that quickly. Or, if you locate items with missing information like the fixed asset’s make and model, warranty expiration, serial number, maintenance history, etc., you can easily make those corrections as well.
Your next step toward establishing an internal audit procedure for fixed assets should be to invest in a formal fixed asset tracking and management system. Attempting to keep up with your school’s fixed assets manually leaves too much to chance – most notably, the potential loss of critical funding. Performing this task in an intuitive, customizable platform frees educational institutions to focus on their most important priority – their students – and relieves them of the stress that comes from having to hunt down the location and details of their fixed assets. When schools know exactly what they have, what condition those items are in, and where their items should be located, they save significant time and money. With an asset tracking system, schools can conduct internal fixed asset audits anytime they wish, spread the work across multiple campuses and employees, and even set up a recurring schedule to make sure audits are being completed regularly.
Asset Panda’s best-in-class mobile app syncs with the cloud to deliver real-time asset data 24 hours a day. Schools throughout the country depend on us to help them account for and maximize the lifespan of their vital fixed assets – and at an extremely competitive price point.