1. Specify the objectives of the company’s fixed asset inventory project
Defining the precise objectives of the fixed asset inventory project is an essential prerequisite and a guarantee of a successful asset inventory exercise.
The objectives of a fixed asset inventory must be sufficiently detailed and concrete to be easily achievable; they must also be consistent with each other and enable the company to achieve synergy effects, which add value to the company.
Poorly defined fixed asset inventory objectives will make the project unclear, difficult to execute, and will generate dissatisfaction and frustration among the company’s internal work force.
Well-defined and clear objectives for an asset inventory will be the constructive starting point for the inventory project.
The other steps in organizing a successful asset inventory project will be easier to implement and will involve more of the internal project stakeholders.
For this important phase, it is also possible to use a specialist company that can bring experience and expertise to fixed asset inventory projects, but it is important to find one!
2. Define the scopes of the business fixed asset inventory project
When organizing an fixed asset inventory, companies need to define the precise scope of their project, taking into account the needs as defined by the company’s internal departments.
There are several scopes that can be considered in an fixed asset inventory project.
Depending on the nature of the project (industrial, service sector, public, semi-public or local authorities, distribution companies, etc.), the sites, buildings, geographical areas and agencies to be inventoried in France or abroad should be precisely defined.
It is relevant to take the opportunity to create/update a nomenclature of locations.
This consists of defining a precise grid (site/building/area/floor/office) of all the company’s locations.
During the inventory, the assets identified will be assigned a correct location, which is then entered into the company’s information system.
A large number of client companies take advantage of the fixed asset inventory project to have rigorous and correct analytical allocations; very often the fixed asset cost centres are linked to geographical locations.
At Actidel our fixed asset inventory experts support our clients in the implementation of fixed asset nomenclature.
When carrying out an inventory of fixed assets, it is first necessary to distinguish between fixed assets and other assets located within the project area.
“Fixed assets or non-current assets (according to IFRS standards) include all assets that are intended to last for a long time. They are also known as “top of the balance sheet”. Unlike current assets, they are not destroyed the first time they are used and cannot be liquidated as easily. Financed by permanent capital, they can be valued by their purchase or production costs (if the company produces them itself).
There are three categories of fixed assets:
– Tangible fixed assets: these are “physical” assets. Typically: buildings, industrial equipment, tools, transport equipment, furniture, etc.
– Intangible fixed assets: on the other hand, these are intangible assets. For example: goodwill, leasehold rights, research and development costs, registered patents, software or websites.
– Financial fixed assets: this non-physical monetary asset represents a financial participation (shares, stocks, bonds), a loan or a guarantee deposit. It is in fact securities and financial claims held by a company.
(Francis Lefevre Formation)
Companies will need to define the accounting categories that will be included in the scope.
Should assets owned by the company but not fixed assets be included in the scope of the fixed asset inventory project.
How to deal with fixed assets relocated to third parties (suppliers, customers…).
Our best practice experts bring all their know-how to help client companies to carefully select the accounting accounts to be included in the scope of the fixed asset inventory project, as well as to take a relevant look at the entire accounting scope of the project.
We can distinguish between different categories of assets within the scope of the inventory project, according to their legal nature
- Fixed assets owned by the company “in situ
- Fixed assets owned by the company and located in the group’s subsidiaries, in France and abroad
- Non-capitalised assets owned by the company
- Assets owned by the company but located geographically with third parties (suppliers, customers, distributors, etc.)
- Assets owned by third parties (customers, suppliers, state, rented, leased, etc.), but physically present on the company’s premises
3. Planning the fixed asset inventory project
Once the objectives and associated KPIs have been defined and the roles of the players have been assigned, it is time to move on to the planning phase of the fixed asset inventory assignment.
- Set the start date of the inventory project and the end date of the project (dead line).
- Set the start and end dates for each operational phase of the fixed asset inventory project (physical count, accounting reconciliation and processing of differences).
- Forecast the dates for updating the company’s information systems following the fixed asset inventory operations and their reconciliation with the accounting bases