Why perform a fixed assets inventory?

Today, the inventory of fixed assets has become a common practice in companies, public entities and local authorities

At Actidel, a specialist in fixed asset management for more than 20 years, we are interested in the reasons that motivate companies to inventory their fixed assets

Knowing and understanding the motivations of our clients in terms of inventory and monitoring of fixed assets allows us to adapt the project to their specific needs and constraints and to steer the operations in the right direction

Below is a non-exhaustive list of these motivations, based on our experience and understanding of our clients’ financial and organisational challenges

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Reliability of fixed assets recorded in the balance sheet and knowledge of the assets

All companies want to know whether the physical reality of their fixed assets corresponds to their theoretical accounting bases

Are their assets correctly and regularly inventoried?

How to register fixed assets upstream in order to facilitate inventory operations, how to monitor them (methodology, resources, periodicity of controls), are questions that our clients often ask themselves

Making a fixed asset reliable means ensuring its physical existence (thanks to an inventory) and ideally creating a “link” (e.g. marking) between the physical and accounting aspects

This marking (barcode, RFID, QR-code, tracker) allows :

– Track the asset over time

– Provide proof to the auditors that the asset inventory has been completed.

In addition, the fixed asset inventory can and must ensure correct analytical and geographical allocations; this is also part of accounting reliability

Internal Audit Rules

In a world where companies and large international groups are constantly looking for ways to secure their finances, the role of Internal Audit is becoming more and more important

Its mission is to analyse the operational, economic or regulatory risks to which the group is exposed, to detect existing weaknesses and to recommend solutions

And because internal audit control affects all levels of the company, and not just accounting and finance, it is most often attached to General Management

Concerning the reliability of fixed assets, the internal audit rules of large groups require regular inventories of fixed assets; however, the recommended methodologies differ according to the specificities of the group and the desired degree of perfection

At Actidel, our approach to fixed asset inventories is oriented in this direction and our work complies with internal audit requirements

Some of our recommendations are even considered sufficiently relevant to be included in the auditors’ recommendations.

Regulatory environment & economic performance

Complying with the various national (LSF), European (IFRS, IFS) and international (SOX) standards is of course a legal obligation

But beyond its mandatory nature, it brings substantial advantages to companies:

– In the event of an audit, it prepares the company to respond to the questions and remarks asked by the auditors

– In terms of fixed asset management, compliance with the various regulations enables companies to measure their economic performance against the standards of their sector of activity but also within the group

– Efficient and traceable asset management provides investor confidence and access to markets and finance

– An up-to-date accounting base (through regular fixed asset inventories) optimises production costs and reduces fixed asset management costs.

Bringing together several sources of information within the company

The information collected during the fixed asset inventory can be used by other departments to consolidate their data and comply with company accounting

Conversely, data held by other departments can be used by the accounting department to enrich and make its fixed asset file more reliable

Thus, during a physical inventory, other sources of information than the fixed assets file can be consulted and updated (non-exhaustive list):

– The CMMS (technical database of industrial equipment)

– The computer equipment file

– The list of industrial tools

– The list of supplier tools (i.e. off-site)

Have an estimate in insurance values

Knowing the amount of capital to be insured in the event of a claim and optimising insurance premiums are among our clients’ objectives

This requires an on-site inventory of fixed assets to ensure their physical existence

The concomitant realization of an inventory of fixed assets and an estimate in insurance values allows for economies of scale; the physical inventory serves as a common base for several objectives

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