Monitoring of fixed assets - the 3 key points - Part 1

The following article describes the three key points for sustainable, efficient and pragmatic fixed asset monitoring.

We will start by highlighting the difficulties our clients often face in implementing sustainable asset monitoring procedures.

We will then discuss the three key points for successful fixed asset monitoring:

  • Fixed asset monitoring procedures
  • Training of staff in fixed asset monitoring techniques
  • The monitoring process for fixed assets

The first part of the article describes the difficulties encountered and the procedures for monitoring fixed assets.

The second part of the article deals with the training and monitoring of fixed assets.

1.  The difficulties inherent in the physical monitoring of fixed assets

Today, the management of fixed assets is a major challenge for all companies, public entities and local authorities.

This control of fixed assets requires the implementation of a long-term monitoring system for fixed assets that is adapted to the company’s operations.

The purpose of fixed asset monitoring is to maintain a lasting match between the physical reality of fixed assets and the company’s theoretical accounting bases.

This physical-accounting matching makes it possible to meet legal obligations (national, European and international) and internal audit rules in force in large groups.

Ideally, the permanent monitoring of fixed assets should be part of the company’s recurring processes.

However, in practice, there are two main difficulties in organising the monitoring of fixed assets on a permanent basis

  • The availability of the client’s internal teams is often a blocking difficulty for monitoring the company’s fixed assets
    The difficulties linked to the availability of the company’s internal teams for the long-term monitoring of fixed assets are manifested at two levels :
    • The limited resources required for the physical monitoring of assets; given that the profiles involved must be technical, accounting and financial, it is not always easy to bring all these staff together regularly
    • The permanence of the teams in place
      Even if the company regularly ensures that it has the teams necessary for the physical monitoring of assets, it is very complicated to maintain the same personnel over time
      The various events that mark the life of a company in terms of staff mobility (absences, transfers, departures, etc.), make the permanence of the teams responsible for the long-term monitoring of fixed assets uncertain
  • Applying a consistent methodology over time
    Once procedures for monitoring fixed assets have been defined, they must be applied on a long-term basis
    The ability to apply fixed asset monitoring procedures rigorously depends to a large extent on the permanence of the teams responsible for monitoring operations
    But it also depends on the relevance of the procedures for monitoring fixed assets on a long-term basis. For this, the company must develop or acquire internal skills and have the necessary experience in the physical monitoring of fixed assets

2.  Procedures for the permanent monitoring of fixed assets

Before being able to monitor fixed assets on a regular basis, it is imperative to define procedures that are sustainable, pragmatic and adapted to the company’s environment.

Once defined, fixed asset monitoring procedures must be drafted once and then versioned.

This means that their content must evolve regularly to take into account changes in scope, process and composition of the fixed asset monitoring teams.

A sustainable fixed asset monitoring procedure should address at least the following points

  • The objectives of physical monitoring of fixed assets
    They must be defined in accordance with internal (internal audit, group rules) and external (national, European and international) regulations.
    They must also and above all take into account the organisation of the company and its sector of activity
  • Internal resources allocated to fixed asset monitoring operations
    It is mainly a question of planning the profiles involved in asset tracking operations so that future absences can be replaced by other staff with the same profile
  • The accounting scope of the fixed asset monitoring project
    This involves defining the categories of fixed assets that will be monitored on a long-term basis by the company’s internal teams.
    This is important because depending on the categories selected to be part of the fixed asset monitoring scope, the methodology to be implemented will differ
  • The geographical scope of fixed asset monitoring.
    Since inventory operations (and reconciliation with the accounting bases) are spread over time, it is necessary to define the geographical areas by reference period.
    Several methods of division exist and will be explained later in the document
  • The methodology for monitoring fixed assets
    The methodology to be used to monitor fixed assets over time depends on several parameters:
    • Labelling of fixed assets (barcode labels, RFID, QRcode, specific tracker for certain equipment or no labelling)
      The labelling of fixed assets depends on the categories of fixed assets included in the monitoring scope
    • The level of requirement defined internally by the audit rules
      For example, some internal audit rules provide for the labelling of movable assets. On the other hand, some fixed asset monitoring rules do not provide for the labelling of furniture; it may either be dealt with by applying management rules or excluded from the scope
    • Periodicity of the interventions (ongoing, monthly, biannual, annual or other)
    • The nature of the interventions (updates, global or partial inventory)
    • The list is not exhaustive
  • Tools for working and monitoring results
    The tools to be used for physical monitoring of fixed assets in the field and for recording results must be defined
    The following is a non-exhaustive list of tools to be provided:
    • Showers for reading tags on fixed assets + tags for tagging
    • Laptops or tablets
    • Software for data entry in the field
    • Software to physically manage fixed assets and if possible linked to the company’s information system

As a reminder, the objective of permanent monitoring of fixed assets is to guarantee the adequacy between the physical reality of the assets and the theoretical accounting bases of the company.

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