Asset management software specialist Assetware has launched a campaign highlighting inadequate record-keeping as a potential corporate governance trap. John Stokdyk reports
Why records go wrong
There are three main reasons why asset audits expose discrepancies:
The existing asset register has not been kept in step with physical
Changes - assets are acquired or moved without the register being updated.
Bulk purchases recorded as a single entry often do not record items as individual assets.
Items below the company's capitalisation threshold do not appear on the register."A large number of finance departments are signing off accounts containing grossly inaccurate figures," the company claimed in a new Guide to asset auditing, available from the company's website.
Major discrepancies arise between the fixed assets recorded in the asset register and the assets actually present in the organisation because finance, IT and facilities departments maintain separate asset records. With no procedures in place for reconciling the information, the finance asset register used for statutory reporting can be compromised.
The guide cites figures from industry analyst Garner that define 30% of organisations as being in a "chaotic" state where do not know what they own, where the assets are or who is using them.
"Put simply, a lot of companies are losing money and may be falling foul of the law by signing off erroneous accounts, and making decisions based on information that’s just plain wrong," said Assetware general manager Chloe Harlick.
As a marketing guide, it comes as no surprise that the Assetware document advocates using software to address the accountability and accuracy issue. Based on the experiences of its existing users, the guide sets out a number of practical benefits of computerised asset management:
Increased sales Being able to know where equipment
Is located helped a UK fork-lift truck dealer respond more quickly to enquiries and increase its sales.
Budgetary control A pet store chain used asset management software to program a store refurbishment and monitor costs against budget with management reports generated for each time period, store and refit project.
Better security Asset audits at higher education college identified large numbers of missing assets, leading to a strengthening of security procedures. This increased awareness helped reduce the number of missing assets.
Procurement savings Asset records helped an IT consultancy identify higher than average maintenance and repair costs for a particular make of laptop PC. The firm used the information to rationalise its suppliers and reduce procurement and maintenance costs.
Avoid end-of-lease penalties Detailed reports on leased assets helped a global organisation reduce end-of-lease penalties and last minute
renewals. Early notifications of lease end dates give the company time to re-negotiate or replace assets.
