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Fixed Asset Management can be defined as the accounting that keeps a track of financial accounting, maintains preventive measures, and deterring theft. Fixed assets can range from immovable assets like land, buildings, plants, to moveable machinery, computers, vehicles, furniture, and intangible assets like software and leaseholds.
Companies need to maintain accurate records regarding their fixed assets. However, it is critical not only to maintain those records, but also to do it in a way that can be used throughout the organization, is updated in a timely manner and can be customized to meet the specific needs of various departments. Creating this comprehensive collection of information on the entire fixed asset inventory involves establishing and maintaining a comprehensive, automated and customizable fixed asset management (FAM) solution.
Fixed assets are the most critical part of any business, and usually cost the highest too apart from the day-to-day working capital. In most cases, they also make up for the highest proportion of any company’s net worth. The constant calculation and updating of depreciation to keep the asset’s value up to the market values is also important. All these small yet significant responsibilities are better left to experts because wrong calculations can lead to financial losses while re-investments or divestments.
Honeymark Consulting’s fixed asset management service provides you with a systematic process for maintaining, upgrading, and managing your physical assets. This service enables you to conduct comprehensive and cost-effective physical audits and ensure an efficient inventory management.
The main added values and differentiating aspects of our professional services are the following:
Policies and procedures should be created to ensure consistent and correct accounting and management of fixed assets.
A company needs to have a defined set of criteria of what constitutes a fixed asset and what is an expense item. If a non-inventory asset is used for more than a year, it should be treated as an asset. However, it is often beneficial to allow expensing assets under a defined capitalization threshold. Such threshold should be carefully considered to avoid expensing assets which should be capitalized, resulting in a misstatement of the company’s financial statements. We help our clients to define and establish a suitable capitalization threshold.
An asset should be depreciated as soon as it is ready for intended use and it must be assigned to the correct books and the correct depreciation formulae. The type of the asset often determines the formula and life, so the asset has to be correctly classified. Our consultants can help to track this information accurately and record it in your fixed asset tracking system.
Fixed Asset Management software packages for tracking and managing fixed assets will make the process more efficient. Avoid practices that rely on manual entry into a spreadsheet or stand-alone database which can be prone to errors. We help our clients select an asset management tool that is best fit for their business. Fixed asset software solution will efficiently track what is in a central database which integrates to other systems containing asset information and automate key fixed asset processes.
Measurement of performance can be relatively effortless if it is well supported by your fixed asset management software, so consider a toolset which allows automated KPI reporting.
This is essential, especially if the organization has many fixed assets distributed across several in one or more locations. Clear labels will help with recording asset movements, asset inventories and so on. Barcoding and RFID solutions may not fit every need. Honeymark consultants help our client to consider the merits of deploying a barcoding solution and evaluate the benefits of various alternatives. In any case, the barcoding or RFID solution must integrate with the selected FAM solution.
Fixed assets should be periodically inventoried.
Fixed asset subledger/detailed records should be reconciled to the general ledger on a periodic basis. The fixed asset software solution should integrate with the firm’s accounting software.
Some assets require regular maintenance to retain their scheduled values or to ensure employee safety. The FAM solution should support requirements to report and provide scheduling notices for regular servicing activity for specified assets (automobiles, generators, HVAC, machinery, etc.).
Establishment of a formal fixed asset management process will result in improved financial reports and statements, make purchasing more efficient, improve planning for replacement equipment and streamline any internal audit processes. The time and budget required to implement the process will yield dividends for years to come.
A strategy roadmap is a bridge (or link) between strategy and execution. It visualizes the key outcomes that must be delivered over a particular time horizon in order to achieve the organization’s strategic vision.
Honeymark commitment to reducing your business risk extends well beyond delivering comprehensive Governance, Risk, and Compliance (GRC) solutions.
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