What is the audit of fixed assets?

Name Author
Francisco Xavier Garcia Nava

Mechanical Engineer / Appraiser

fixed asset audit

When having a company it is important to know which are the assets that exist in it, for this reason it is important that, constantly, an audit is carried out, which is the counting and capture of information of furniture, machinery and electronic equipment that you have. . 

Doing this will help to know the state of the assets and make important decisions about them, such as sale or replacement, in addition to having the certainty of what exists within the company 

What is the fixed asset audit for?

An audit procedure for fixed assets should be carried out for assets that are expected to last more than one year, such as land, buildings, machinery, equipment, etc. Fixed assets are essential resources for a business since they are used constantly and cannot be sold immediately.  

How often should the fixed asset audit be carried out? 

An audit of the assets must be carried out once a year to have an updated record of the fixed assets in an appropriate way, which is detailed and allows us to realize the state in which the asset is located.

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If there is no such control or registration of fixed assets, a large amount of money will have to be paid due to the lack of documentation, loss of information or transfer of assets, which affects the business.

In the audits of fixed assets, the complete information of the asset is recorded, through plates, labels or QR codes and include data such as brand, model, series, date of purchase, maintenance log, etc.

What is the methodology for conducting an audit of fixed assets? 

The procedure for an audit of fixed assets includes the following information:

  • All information such as asset description, classification, location, quantity, acquisition amount, acquisition date, revaluation details, depreciation rate, accumulated depreciation, depreciation for the current year, all these information are required to be reported in the registry. of the asset.
  • Description of brand, model and series.
  • Correct calculation of depreciation.
  • Proper labeling.
  • Documentation of asset movements.

How is asset auditing done with asset management software?

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A fixed asset audit procedure includes the use of bar code technology or QR code, which performs a scan to make the verification of assets in an efficient and simple way. It also allows you to create any report, accounting or any report in accordance with international jurisdiction when required.

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The audit of fixed assets ensures that the assets are in their real location, this helps to create a balance sheet that ensures regulatory compliance and better internal control, in addition these formats and modules within the balance sheets can be edited with based on the needs of each company. 

An audit of fixed assets allows for the issuance of a complete report with an exhaustive methodology for reviewing the company's assets, which is why a fixed asset management system is required that allows efficiency in the audit procedure, since this software fixed assets will allow the user to attach photographs, invoices and documents, in addition to having access to the history of the asset being reviewed. 

have a asset monitoring software It will also allow the company to receive maintenance alerts when the machinery is going to require and also control the work orders and in the event that it requires the change of parts, manage the management through the platform. 

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What are the frauds with the management of fixed assets?

The main problem that companies can face is the embezzlement of the assets that are in it, this includes a wide variety of misuse or theft of assets and can affect or throw red numbers within the audits that are carried out. are doing, for this reason it is important to identify where the problem comes from. 

Some of the causes may be: 

  • Payment of invoices to non-existent suppliers, which results in a diversion of funds within the company. 
  • That company assets are being removed without authorization and for personal use. 
  • That invoices are made for goods or services that have not been carried out. 
  • Making a false claim for goods that are damaged or delivered in poor condition. 
  • The theft of assets within the company. 

In order to identify these problems, it is important to constantly audit the assets within the company, taking care that all the information is in order and preferably in one place, with correct labeling and control of the assets that enter and leave the company, as well as the state in which they are. 

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