As the New Year begins, it’s that all important time where we reflect on the changes we want to make and put in place resolutions for improvement, be it a healthier lifestyle, saving money or spending more time with family and friends. From a business point of view, now is also the perfect opportunity to review your processes, procedures and systems and decide on what is working for your finance department and what isn’t.
Here at Real Asset Management, we have put together a list of 5 key resolutions for fixed asset health which you should be considering for the year ahead.
1. Abandon the spreadsheet and confidently comply with IFRS and AASB requirements
If you are still using spreadsheets to manage an ever growing asset register, you are no doubt struggling to address a variety of issues surrounding the accountability and traceability of your asset base. This archaic tool is renowned for the issues it creates in terms of human errors and manual processing for the finance team which is not only time consuming, particularly at month and year-end, but can also negatively affect the accuracy of finance reports, causing re-reporting and ultimately impacting the bottom line. A recent article published on NZBusiness online further explores the limitations of using spreadsheets for managing fixed assets.
In addition, corporate governance requirements dictate improved ﬁnancial management and increasingly detailed reporting which can prove extremely complex, particularly for organisations managing a large number of assets on a spreadsheet.
2. Undertake a physical audit
If you haven’t carried out a fixed asset audit in the last year, now is definitely the time to do it. Audit information is central to the successful management of your assets and ensuring that the data is accurate is essential to the whole process. It’s important to make sure that all information is continually kept up to date to ensure that the data is correct and audit checks are undertaken in a matter of minutes, rather than hours. Physical audits are essential to clean up variances between what is being financially accounted for on a register and what is actually present. Benefits include better control over assets and the ability to track and plan for software and equipment upgrades.
3. Add barcode/RFID tags to fixed assets
Barcode and RFID technologies will speed up physical audits, making them both fast and efﬁcient and leaving the ﬁnance team with more time to focus on other tasks. The use of barcodes can provide a much more accurate audit, removing the inherent human error of incorrectly identifying assets. A scanner provides an electronic trail of items that have been found and updates to data ﬁelds such as location, condition, etc. can be carried out via the device and synchronised back to the asset register. With the use of a scanner and tracking software, an audit can typically be completed in 80% less time than if it were done manually with pen and paper.
4. Ensure information security and audit trail
Make certain that ﬁxed asset information is safe by implementing a system that tracks and records every detail of every action made by any user. By logging actions, dates, times and explanations, it is simple to ensure data security and integrity, an essential requirement in complying with IFRS/AASB regulations. Demand a valid username and password combination to enter the system and deﬁne security levels for each individual using it. Controlling access and implementing a tracking system with an audit trail will increase the security of the company’s ﬁxed asset management.
5. Run depreciation monthly
A lot can happen in a month and it’s important to keep your depreciation values up to date. This will help both financial management, as well as prioritising asset maintenance. The use of a specialist fixed asset solution will make this a fast and simple exercise, automatically calculating depreciation for any period or range of periods across multiple books as required.
If you are still using spreadsheets or an outdated system and looking to improve your fixed asset processes during 2018, why not contact RAM today for a free consultation. RAM’s specialist system will integrate every aspect of fixed asset management and incorporate depreciation, asset budgeting and forecasting, lease accounting and asset tracking.
If you are already using RAM’s fixed asset software, don’t forget to implement upgrades when they are available. By taking advantage of the latest product upgrades, you will always be running the most up to date version of the system and crucially, have access to the latest features and functionality ensuring optimum performance and use of the software.