Are Your Fixed Assets Audit Ready?

While on site last week performing fixed asset consulting and data work, my client had encountered last-minute auditors. Not just one, but three (3) from different places. Funny thing was, they were keeping their fixed asset listings and their CIP (construction in progress) accounting assets in the same spreadsheet. Boy, was it a long one with filters and pivot tables, etc.

During the first day of my stay, I uploaded their fixed asset records into FAS Asset Accounting, ran some preliminary depreciation to balance back to FY 2010. In a matter of hours I was able to prepare a report in 3 different formats and export out to a PDF for the corporate Controller. At the end we noticed about a $95K difference in depreciation – in their favor!

The next day the Auditors were in and out of the Controllers office asking all about fixed assets and their current schedule and if they could get a listing sorted by asset class / asset type with sub-totals by location. With their current “system” (aka: spreadsheets and SAP fixed assets), they couldn’t get this or make this readily available. However, with Sage FAS Asset Accounting they were able to very quickly.

Thank goodness they had a fixed asset Consultant on deck that week. Next time they have an unexpected / unanticipated audit (they thought they had until December), they will be even more ready with CIP reports as well. So the question is… are YOU and YOUR fixed assets audit ready?

Physical Fixed Asset Inventory / Audit: Quick Start

In the past few months, I’ve received about one or two calls a week with questions pertaining to conducting physical inventories.  Which gets me thinking… Oh yeah, it is about that time a year again.  Internal audits of companies fixed assets! 

About this time every year is often when companies start putting deadlines on themselves for gathering their information.  Many times it is sparked by internal audit controls, SOX testing, reorganizing, or better yet, “the auditors just left and said we need to do a better job controlling our fixed assets“.

After having several conversations with all these different companies; their situations running in a variety of flavors… I get a little worried that perhaps, they are still going to venture off in the wrong path.  The one of destruction not success.

 Things to ponder and prepare yourself for BEFORE running willy nilly amongst your assets:

  1. First thing to ask yourself – Is everyone on board internally with this project?  By everyone I mean, departments other than Accounting?  Remember to think of your compadre who work there too.  Example: IT Department, Facilities, Tax Department versus Finance (crazy, but we run into this miss-communication factor quite often).
  2. Second part – where is your data now and what’s it look like?  Are you pulling your fixed asset data from a spreadsheet, home-grown system, IT’s list/system, Facilities listings?  You need to know what data you have and what it looks like so you can better determine what course of action you will be performing with your inventory.
  3. Third piece of the puzzle – AFTER you review your data and data sources, you need to determine if it’s best for you to perform either a Dynamic Inventory or a Baseline InventoryThis is the BIG decision people!  You make the wrong choice here and you could be wasting a lot of precious time and end up taking f-o-r-e-v-e-r on your project.  Or even worse, you may end up doing it all over again!
  4. Moving forward – Labels / Tags… what kind, how many, what are they going to look like?  Order them and provide yourselves with a couple of weeks turn around.  It’s all about scheduling.
  5. Tag em’ – by now you should have already determined what you are tagging, where your putting the tag and who is tagging.  Also, you should have already decided by now WHAT information you will be gathering.  Seize the day and attack!
  6. The BIG Bear of Inventory – reconciliation time folks!  Keep in mind and be prepared that this CAN and WILL take some work.  Especially if your company is a first timer (meaning – you’ve never performed a physical asset inventory – ever).  However, this is where the fruit of your exhausting labor comes into play.  You get to find out what you have, what you don’t have (ghosts… BOO), where it is and who is responsible for it. 
  7. Last but certainly NOT least – keep up the good work my friend!  Now that you’ve cleaned up your data, keep it clean.  Now is the time to determine when you will be performing the next one to ensure that your data stays accurate.

Whew, I feel better getting that off my chest.  I know what you are thinking and I agree, that does seem like a lot to think about and plan before running like a crazy person through the field of assets.   Knowing about fixed assets is one thing… Trying to find them and clean them up is another! 

P.S. did you know that Paragon Systems offers an array of physical asset inventory services and consulting?  Yeppers… ala carte or full load.  Email me.

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