Have you ever had to search through a warehouse, office, or factory looking desperately for an asset that should have been there but isn’t? You’re not alone.
Fixed assets are the lifeblood of any business – from premises, machinery, and IT equipment all the way down to tools, furniture, and containers. Keeping track of them can be challenging at times but getting it right is essential for efficient operations.
An effective fixed asset audit will help you keep on top of your assets and make sure everything runs smoothly – and that’s what this post is about. Here we explore what a fixed asset audit is, why it matters, and how to prepare for one effectively with the aid of IoT Asset Tracking technologies.
What is a Fixed Asset Audit? Why Is It Important?
A fixed asset audit is a detailed examination of an organization’s asset base. Whether performed as an internal audit or an external audit, it verifies the accuracy of asset records, identifies asset losses or transfers, and serves as a proactive check that asset management processes are being followed correctly.
The audit process typically involves physical inspections, documentation reviews, interviews, and reconciliation of asset records with relevant personnel within the organization.
The main aim is to identify and report any discrepancies between financial records, asset documents, and their actual characteristics/location in order to ensure that assets are properly accounted for and secure.
A successful fixed asset audit provides businesses with reliable data regarding the state of their assets and forms an important part of the overall corporate financial planning process.
What Does a Fixed Asset Audit Typically Include?
Conducting a fixed asset audit involves meticulously examining the asset register, physical asset counts, asset verification, and asset review. A team of personnel with accounting and auditing experience should be hired to ensure accuracy in all aspects of the asset audit.
- Examination of the Asset Register: The asset register should contain a list of all assets which have been purchased for the company’s use, including information such as purchase date and cost.
- Physical Asset Counts: Asset counts involve glancing over every asset physically to determine if any assets have been misplaced or tampered with.
- Asset Verification: Verification of assets is then conducted to ensure that assets are accounted for in the asset register.
- Asset Review: Finally, after all steps have been completed, an asset review is done to identify any potential discrepancies that appeared during the process and suggest ways to improve asset management going forward.
Through fixed asset audit procedures, discrepancies between the physical and accounting records can be discovered and monitored over time.
While an asset audit may seem overwhelming, it is intended to provide insight into how the organization can best use its resources for maximum return. With proper preparation, a fixed asset audit can help optimize processes for a greater level of inventorial control.
Common Challenges Businesses Face With Fixed Asset Audits
Conducting a fixed asset audit presents many challenges for businesses.
One of the most common challenges that businesses encounter when conducting a fixed asset audit is determining how long assets have been on hand and where they are located.
Many businesses do not have precise records of asset acquisition costs, which can lead to asset or asset parts being forgotten or overlooked. Maintaining accurate asset detail throughout the asset lifecycle is essential for successful asset audits.
Additionally, verifying asset-level information such as asset life, depreciation classifications, and asset history is often hindered by poor documentation or manual entry processes.
Furthermore, unpredicted issues such as ghost assets, equipment theft, damage, and other potential losses can leave gaps during asset review.
To minimize audit risk, businesses should ensure that asset information is stored in a central repository which is updated regularly with changes. With such a system in place, asset auditors have greater clarity when identifying discrepancies within the asset registry.
How IoT Asset Tracking Helps Businesses Prepare for a Fixed Asset Audit
IoT asset tracking solutions provide businesses with unprecedented asset visibility, which can be a major advantage when preparing for a fixed asset audit.
With IoT asset tracking software, businesses have real-time access to the exact location of their assets and up-to-date information about each asset’s life cycle history. This helps them to quickly and efficiently identify any irregularities in asset audit processes, allowing them to avoid common challenges such as inaccurate asset counts and insufficient documentation.
They can also track asset information like asset utilization metrics, rate of depreciation, maintenance intervals, etc., which enables better decisions when discussing asset replacement plans or correcting errors from the past.
IoT asset tracking solutions ultimately make it easier for businesses to prepare for an asset audit by providing the most accurate data possible, saving them time and energy from having to reconcile errors or physical searches throughout the building—ultimately avoiding some of the most common challenges entirely.
With an IoT asset tracking solution at their side, businesses can rest assured knowing that they will be compliant and prepared for any asset audits.
The Benefits of IoT Asset Tracking for Fixed Asset Audits
An IoT asset tracking system is a vital tool for any organization undergoing a fixed asset audit. Such a system offers numerous benefits, such as the ability to accurately track asset movements and locations in real-time.
By employing an Internet of Things (IoT) asset tracking solution, businesses can stay up to date on asset values and reduce compliance risk as they are able to successfully trace location histories with ease.
Moreover, having an IoT asset tracking solution in place during an asset audit can provide transparency into the ownership and asset depreciation process, helping ensure tax accuracy.
Beyond the auditing process, asset tracking solutions help organizations optimize their costs by reducing inventory shrinkage and aiding in informed decisions about which assets need replacing or repairing over time.
All these advantages of implementing a comprehensive IoT asset tracking solution combine for a powerful asset audit tool that can help any organization formulate an effective audit plan quickly.
Audit-Proof Your Business With Radiant’s IoT Asset Tracking Solution
By now, you should feel confident about what a fixed asset audit entails and how to properly prepare for one. Not only can IoT asset tracking provide comprehensive visibility and control of equipment movement, but it also eliminates common challenges associated with fixed asset audits.
At Radiant, we understand that these challenges can be daunting, which is why we created our asset tracking solution to help alleviate your worries. Our product provides an end-to-end solution that monitors the location, health, and performance of assets throughout their lifecycle – making them easier to audit-proof.
When you document the movement of tracked items, they become easier to account for during auditing, in addition to helping reduce repair and replacement costs. To find out more about how our product can help make the audit process effortless for your business, explore our IoT asset tracking solution and request your demo below.
Last Updated on March 16, 2023 by Radiant