Physical Asset Verification And Reconciliation
Many large organizations has many assets which needs to be physically verified and carry out records reconciliation based on the books and tag the assets using barcode and RFID technology.
Fixed Asset Management (FAM) is a terminology to denote all policies, procedures and controls in place, with respect to Fixed Assets procured by a company, to ensure accuracy in recording of assets in books of accounts, tracking of location of fixed assets and its maintenance. Main Components of FAM
Accounting for Fixed Assets
- Capitalisation of newly procured asset
- Conversion of Capital Work-in-progress into Fixed Asset
- Depreciation Accounting
- Accounting for deletions / write off / lost asset / retired / obsolete assets
Inventory Record of Fixed Assets
- Register maintained to track current location of assets capitalised in the books of accounts.
- Register shall record all relevant details of the assets including Make, Model, PO Number, Invoice Number, Current Location, Serial No, etc.
Repairs and Maintenance
- Register maintained to track assets sent for repairs
- Register to track AMC, Warranty and Insurance details of assets.
Current FAM Methodology
Benefits of the FAM Solution
- Financial statements compliant with Accounting Standards and GAAP for Fixed Assets Accounting.
- Complete details of assets procured by the company available in single database.
- Easy identification of capitalisation entry in case of relocation, obsolescence, disposal and replacement.
- Accuracy in depreciation calculation and their allocation to cost centres.
- Comprehensive Fixed Assets Register will form the base while conducting Assets Physical Verification activity.
- Assets lost, stolen, relocated, etc. could be easily identified on timely basis.
- Real time update of assets movement and ready availability of their current location.
- Reduced duplication in effort and time involved in recording information in multiple registers.
- Easy identification of useful life of an asset by Finance Team.
- Ease of carrying out 100% physical verification of assets in all locations to ensure security of company’s assets.