Monitoring of fixed assets - the 3 key points - Part 2

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 – read first article here

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

3.  Training of staff in the long-term monitoring of fixed assets

Training of company staff in fixed asset inventory procedures is a key aspect of successful asset tracking over time.

Training should take place just prior to the stocktaking exercise and should include the following:

  • The training should be simple to understand; the staff responsible for asset monitoring are likely to have other duties within the company and probably little time to devote to it
  • Training in fixed asset inventory techniques must clearly define the roles of each person and provide for replacements in the event of absence of the incumbents
    It is relevant to organize it by profile within the company (production, maintenance, accounting, finance, purchasing, etc.) to better manage absences by department
  • Training must be regular; because men and women evolve in their careers (change of post, departure from the company, replacements) and because knowledge is forgotten, it is important to provide regular training in fixed asset monitoring techniques
    It would be ideal to position these training sessions just before the monitoring operations
  • Effective training will need to be organized under the responsibility of a designated person, ideally Mr or Mrs “Fixed Assets”
    His/her role will be not only to organize the training but also to update the procedures so that they correspond to new objectives and constraints

4.  The process of permanent monitoring of fixed assets

Once the procedure for monitoring fixed assets has been defined, the work should be carried out according to the prescribed method, periodicity and geographical breakdown

  • Monitoring fixed assets; which asset tagging method to apply?
    Depending on the category of fixed assets, the method used for tagging assets may be different; for example
    • For “palpable” industrial equipment (machines), labelling should be provided
    • o For “non-tangible” industrial equipment (industrial fittings), a “list” treatment seems more appropriate. The objective is to link these fixed assets to manufacturing processes or production lines
    • o For IT equipment, a “checklist” based on the file held by the company’s IT departments can be carried out. Provided that the IT equipment file is deemed sufficiently reliable
  • Monitoring of fixed assets; what should be the nature of the monitoring?
    • Update; this operation consists of processing the discrepancies between two versions of the accounting base (for example between N and N+1).
      This processing will cover new commissioning, asset retirements and geographical transfers of assets (intra-site or between different group entities)
    • Checkpointing; this method consists of checking the fixed assets recorded in the fixed assets file in the field in order to validate their existence. The disadvantage of this method is that it does not guarantee the completeness of the inventory because assets that are physically present but not fixed assets will not be inventoried
    • Complete inventory; all fixed assets will be inventoried and reconciled without distinguishing between old and new assets
      Very often a mix between these different methods seems to us the most relevant
  • Monitoring fixed assets; how often?
    Depending on the requirements of the internal audit and the organisation of the company, the periodicity of the regular monitoring of assets may vary:
    • On an ad hoc basis; new fixed assets are tagged as they are recorded in the accounting file. This gives an accurate picture of fixed assets in real time.
      This method requires permanent rigour and continuous availability of the teams
    • According to an initially defined periodicity: monthly, quarterly, half-yearly or annually
      This choice of fixed asset monitoring frequency depends on the requirements of the internal audit, the company’s organisation and the pace of new acquisitions and equipment renewal.
      In this respect, exceptional inventories may be provided for in the procedures in order to take account of exceptional events (mergers, partial disposals, massive investments, etc.)
  • Without any defined periodicity at the outset, fixed asset monitoring operations are carried out according to needs (new investments, exceptional events, etc.)
    This way of monitoring fixed assets on a long-term basis does not seem to us to be efficient because it does not ensure the regularity of asset monitoring.
    Depending on how the company is organised, the monitoring of fixed assets can be postponed to an indeterminate date
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