Fixed Asset Control How is fixed asset control done?
In today’s business environment, where efficiency and transparency are critical to success, proper fixed asset management has become a priority. Companies that neglect this area can face significant losses, not only financially, but also in terms of productivity and competitiveness. It is estimated that organizations can lose up to 30% of their revenue due to ineffective asset management. This article explores the importance of fixed asset control, best practices, and emerging technologies that can help companies optimize their resources.
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ANEPSA is one of the pioneers in Fixed Asset Control in Mexico, we help achieve and maintain adequate control of a company's fixed assets, providing personalized solutions appropriate to your needs, this thanks to the wide range of tools and the team of professional experts in the field.
There are specific questions that can help determine whether any of the stages included in a comprehensive fixed asset control system need to be implemented.
Do you know the current value of your assets?
Do you know the exact location and physical condition of your assets?
Do you have proper control over them?
Do you know if your current assets reported in your accounting records physically exist?
Do you have any fixed asset management procedures?
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What does fixed assets include?Â
The fixed asset represents tangible goods and intangible that a company owns and uses in its business operations to generate income, includes elements such as:
- Properties, plant and equipment: Buildings, land, machinery, office equipment, vehicles, etc.
- Furniture and fixtures: Furniture, computers, communication equipment, among others.
- Production team: Tools, specific machinery for production, etc.
- Intangible assets with defined useful life: Trademarks, patents, software with a specific useful life, etc.
These assets are acquired for long-term use in the operation of the business and are not intended for immediate sale; they are a crucial part of a company's production and operating capacity over time.
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FIXED ASSETS CONTROL PROCESS AND FIXED ASSETS MANAGEMENT
Pre -Start of Control
To present a tailored work plan and appropriate tools for integration with the company's needs, a comprehensive fixed asset control system may involve physical inspection, information requests, and in-depth investigations of the company's policies and distribution. These requirements are often prioritized at different levels based on their importance.
This part of the complete and cyclical that you want to have in control of your assets, for which a package will be made to suit the client, the solutions are integrated into:
- Fixed Assets Integration
- Fixed Assets Reconciliation
- Fair Value Fixed Asset IFRS – 13/ B – 17 I Property, Plant and Equipment C -6 /IAS-16 I Long-Lived Assets C-15/IAS-36
What are the stages of a Fixed asset control?
A typical fixed asset control process begins with a physical inventory, during which all assets are identified through the use of tags, labels, or other means of physical identification.Â
Assets should be identified at their exact location to assign them a user area and an accounting cost center. This identification allows for accurate record keeping of the physical condition of assets.
This inventory will be useful to develop an initial database of the company's assets.
Once the process has started, it is divided into the following stages:
Integration and rectification of the accounting statement
In order to properly identify each asset without affecting its current depreciation and investment values, the company's accounting records must be thoroughly reviewed. By doing this, we will have a broad and reliable accounting basis for the reconciliation.
Inventory and plating
Filling out forms (brand, model, series, etc.). Placement of label or plate. Asset number assignment.
Reconciliation with accounting books
The inventory database must match to the acquisition cost expressed in the accounting records. The objective of this stage is to assign and validate the accounting values of each asset physically identified.
Listed Fixed Asset Control Processes
I. Fixed asset inventory control stage
- Requirements: The distribution of the industry, plant, or company where fixed asset control is to be performed is reviewed to generate a work plan. The plan will include a database layout, a list of assets to be controlled, the company's capitalization policy, and a tour of the facilities, all of which are delivered with prior authorization.
- Inventory and tagging: Previous inventories will be taken into account. Alternatively, the inventory process will be carried out, as well as the placement of plaques and tags on the company's assets. Each asset will be assigned a number.
- Inventory data collection: Data will be collected using the authorized database layout, and subsequently reviewed and corrected to ensure that all assets have been properly accounted for in the inventory. This process results in a physical database of all assets.
- Closing stage: To ensure the accuracy of the database, the company's coordinator will perform a random review of the assets entered into the system to verify their presence.
II. Documentary Integration Stage (Modification of accounting listings with Documentary Support)
- Collection: Upon receipt of invoices and accounting records, the invoices are coded and a report document is generated to reflect the accounting amounts found in the company's documentary support, such as invoices.
- Accounting record analysis and modification: A search is conducted to identify the invoices that correspond to the accounting record. These invoices are then rearranged component by component, which enriches the information obtained from them.
- Comparative table: The table provides an analysis of the accounting records that have been located as well as those that have not. This information helps the client to determine how to proceed with the records that have not been found.
- Closing stage: After generating the Final Accounting Integration database, the coordinators sign the report document to signify their acceptance of this stage.
III. Physical-accounting Reconciliation Stage
- Requirements: The database obtained from the inventory and accounting record database are taken into account.
- The physical-accounting reconciliation process is carried out.
- The following types of reconciliation are analyzed: 100%, Simil and Accountable
- Fixed assets that have not been reconciled are suggested as new accountable acquisitions.
- Records that have not been reconciled are suggested as disposals.
- The first reconciliation report is made.
- The review of pending reconciliations is performed.
- Closing stage: Decisions are made on the remaining pending and the work is approved.
Objective and importance of Fixed Assets Control
To ensure that production at an industrial plant remains uninterrupted, the financial manager should carefully consider the replacement of assets based on their useful life. To do so, the manager must take necessary measures by periodically evaluating the technological, economic, functional, and even fiscal performance of each asset.
Having qualified personnel who reports on the fixed assets that are considered physical and temporary property of the company is of vital importance to have a financial incorporation into the books, and for decision making as provided in the final report. The deficiencies of poor control of fixed assets can attract both economic, productive and operational losses.
By not having a correct management of our investment, major losses are most certain guaranteed. Implementing proper fixed asset control has the advantage of measuring a company's administrative efficiency with respect to fixed asset control policies that may not be properly fulfilled.
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- Have an organized invoice file
- Properly register fixed assets
- Being able to identify your assets in a simple way
- Knowledge the historical and current value of assets
- Easy physical identification of your assets
- In-depth analysis of the accounting records
How to apply RFID technology for fixed asset management?
Radio Frequency Identification (RFID) technology is used in fixed asset management to track and manage physical objects using RFID tags or tags. It is also used to identify, manage and optimize asset management in a variety of environments, including businesses, educational institutions, hospitals, warehouses and more types of industries.
Some of the activities where you can be present are:
Asset tagging: Each fixed asset (equipment, machinery, devices, etc.) is assigned a unique RFID tag that contains specific information about the asset, such as its serial number, location, acquisition date, maintenance date, etc.
Label reading: RFID readers emit radio waves to read RFID tags, they can be fixed in strategic locations or portable devices used to scan assets in different locations.
Information record: When an RFID tag is scanned, the reader collects the information stored on the tag and transmits it to an asset management system (software) for recording and tracking, this software can store and manage data related to the assets, such as the current location, maintenance history, depreciation, etc.
Track and trace: RFID technology allows precise tracking of the location of assets in real time, as it facilitates the rapid location of assets, which is useful for inventories, maintenance, loss prevention, and management of asset movements and transfers.
Process automation: By integrating RFID technology with asset management systems, tasks such as inventory, asset auditing, maintenance scheduling and reporting can be automated, thereby saving time and reducing human errors in asset management.
What is the Fixed Assets Control System?
In today's business world, there are numerous solutions available that facilitate the control of Fixed Assets and encompass all the options described in the Procedures Manual.
Specialized fixed asset control software provides companies with the advantage of speed and ease of use, enabling efficient administrative and accounting management while ensuring that the system is updated and available for consultation at any time.
It is important that from time to time the administrative and accounting management carry out a review of the system information through partial or total inventories, this will allow the necessary adjustments to be applied so that the system remains updated and does not lose its function.
Our system has a module for each of the needs preceding these concerns.
Fixed asset management software
Fixed asset management software is a technological tool designed to facilitate the control, monitoring and efficient administration of the tangible assets that a company owns and uses in its commercial operations. These programs are intended to optimize the life cycle of fixed assets. , from its acquisition to its final disposal, allowing the detailed record of each asset, its location, condition, depreciation, maintenance, and other relevant aspects, the systems offer functionalities that help improve accounting accuracy, maintenance planning, taking of strategic decisions and compliance with regulations, facilitating more effective and transparent management of the company's resources.
There are softwares that allow control in a more detailed way, where all the information on the company's assets can be included in a single platform, in order to view it from wherever you are, with detailed reports, amortization tables for each of them. assets and traceability of outputs and inputs. SAAF It is a software that can be very useful in managing fixed assets.
What specific information should be included in the database of an asset control system?
The Database of a proper Fixed Assets Control System should contain the following information mainly:
- Physical identification code of each asset
- Equipment and Model Code
- Detailed description of the asset
- Acquisition date
- Acquisition document and accounting record number
- User area to which it belongs.
- Accounting Cost Center
- Acquisition cost
- Asset net values
- Current status
- Financial Depreciation
- Responsible Employee
- Fixed asset original cost
To ensure the Fixed Assets Control System remains current, our team should maintain accurate records of system operations, although clients may also manage this task.
To maintain control over the company's fixed assets, any changes made to them must follow a prescribed procedure that includes:
- Documents and fields to be used for each asset acquisition
- Integration of modules required by the company (administrative, financial/fiscal, or maintenance).
- Matching with middleware API, or development of specific requirements by the customer.
Given the long-term nature of fixed assets and the potential for numerous individuals to engage with the asset control system, it is of paramount importance to have a comprehensive procedure manual in place. This manual should clearly outline the required documents and flowchart for each stage of the asset movement process to ensure proper tracking, management, and accountability.
Modules to automate Fixed Assets Control processes:
- Inventory: This section allows you to add all the assets that the company has and that in this way are condensed in a single file.
- Inputs and Outputs: The platform enables users to maintain proper control over inventory inputs and outputs, resulting in accurate records of all transactions.
- Change History Report: Allows to keep a detailed history of all changes made to the company's assets so that users are aware of them.
- Maintenance Alerts:Â In case the assets require maintenance, the program will notify you in advance.
- Import and Export of Fixed Assets databases:Â If you have a previous database in Excel you can import it and also if you want to download a database from the software you can download it and use it in the program you prefer.
Products
Fixed Assets Control Software
Through varied solutions for clients, a comprehensive tool for fixed asset management called SAAF has been designed.
Barcode/QR Code Plates
As part of the solutions to be offered to customers, there are metal plates and self-adhesive labels with barcodes and QR codes; They help us easily identify assets, which are suitable for any type of environment.
Barcode Scanner
A wide variety of barcode reading equipment is supplied, adapted to the needs for the easy identification of your assets.
Technology and Trends in Fixed Asset Control
In addition to RFID technology, which improves asset tracking, there are other innovations that are transforming fixed asset management:
IoT (Internet of Things): Enables the interconnection of devices that collect and share data. In asset management, this means that assets can send real-time information about their status, location and usage, facilitating predictive maintenance and inventory management.
Blockchain: This technology provides an immutable record of transactions, which can be useful for asset management, ensuring the authenticity and history of assets. It can improve transparency and trust in transactions involving fixed assets, especially in industries where provenance is critical.
DronesIn large facilities or warehouses, drones can be used to perform visual inventories, which speeds up the audit process and reduces human error.
Benefits of asset control
Effective fixed asset control offers multiple benefits for companies, including:
Improved decision makingWith accurate data on asset status and location, managers can make informed decisions about equipment investments, maintenance and replacement.
Cost reduction: Optimizing asset management can reduce operating costs by minimizing losses, deterioration and unnecessary use of resources.
More effective financial planning: A clear record of assets allows companies to plan their expenses and budgets more accurately, improving their long-term financial health.
Normative complianceMaintaining strict control over fixed assets helps companies comply with tax and accounting regulations, avoiding penalties and fines.
Improved operational efficiencyBy having an up-to-date and accurate inventory, companies can operate more efficiently, reducing time wasted searching for assets and managing inventory.
Common challenges and solutions in fixed asset control
Companies may face several challenges when implementing a fixed asset control system, including:
Resistance to change: Employees may be resistant to adopting new technologies or processes. It is crucial to implement a change management plan that includes training and clear communication about the benefits.
Outdated data: Lack of an up-to-date system can lead to inaccurate records, making it difficult to reconcile physical and accounting inventory. Periodic audits are essential to ensure data accuracy.
Initial costs: Investing in technology and training can be a barrier for some businesses. However, it is important to view this as a long-term investment that will yield significant savings.
Solutions:
Continuous training: Provide regular training and resources to help employees feel comfortable with new tools and processes.
Gradual implementation: Starting with a pilot project in a specific area before expanding to the entire organization can ease the transition.
Regular audits: Establish an audit schedule to review the status of assets and ensure that the control system remains up-to-date and accurate.
Recommendations on Fixed Asset Control
Fixed asset control is an essential component to the success and sustainability of any business. Implementing a robust system not only helps minimize losses and costs, but also improves decision-making and regulatory compliance. As emerging technologies such as RFID, IoT, and blockchain continue to evolve, businesses have the opportunity to further optimize their asset management processes.
Practical recommendations:
Evaluate your needs: Before implementing an asset control system, conduct a thorough assessment of your company's specific needs.
Invest in the right technology: Select software that fits your organization's characteristics and that offers regular technical support and updates.
Establish clear policies: Define clear procedures for asset management, from acquisition to disposition, and ensure that all employees are trained in these policies.
Conduct periodic audits: Schedule regular reviews to ensure inventory accuracy and the effectiveness of the implemented system.
By taking a proactive and strategic approach to fixed asset management, businesses can not only protect their investment, but also drive long-term growth and success.
