Fixed asset management is a complicated process because organizations do not exact the location of their assets. As a result, when fixed asset physical verification is done organizations find that their lots of assets are in some other location or missing.
That is why from time-to-time physical verification must be performed. In this blog, we will know what the major fixed assets physical verification challenges occur! So, let us begin! But first, let us understand the basic definition of physical verification.
What Is Fixed Asset Physical Verification?
Fixed asset physical verification is the responsibility of the management. It should be implemented after every specific period to ensure assets exist and are not misplaced or stolen. Physical verification of assets is done by an insider (organization’s payroll) of the organization or an outsider that can be a government auditor.
Physical verification of assets is done to check that assets assist in this process all the documents are verified along with the physical asset verification. All the records are checked so that authentication can be checked. Asset physical verification is an important aspect of audit and compliance management.
Physical asset verification of assets is helpful in calculating the actual worth value of the assets that organizations own.
Recommend To Read: Importance of Assets Auditing for Equipment & Tool Rental Companies
What Are the Major Challenges That Occur in Fixed Assets Physical Verification?
Below we have discussed major fixed asset physical verification challenges:
1. Long Hectic Process
Usually fixed assets verification process is long and hectic, the reason being that there are lots of assets in an organization. Apart from that, some of the assets are in other locations verifying each one of them can be a complicated process. Moreover, each document is also checked and rectified.
2. Ghost Assets Identification
Some of the assets are stolen, misplaced, and lost; these assets become ghost assets. It is important to identify ghost assets as they can be lethal to your business as you will end up paying taxes for those assets which you are not even using.
Moreover, external auditors can think of ghost assets as fraudulent activities because of the over-evaluation of assets. Therefore, ghost assets must be eliminated in the right way and must be removed from all data & records.
3. No Systematic Approach
When there is no systematic approach then asset auditing and physical verification become more complicated. It is one of the major challenges that occur in fixed assets physical verification specifically when work is done manually and there is no strategic approach. There is no proper procedure for fixed assets registry & verification.
4. Pen and Paper Method
Asset physical verification is hectic because organizations utilize the pen and paper method. This practice is no good if your organization is asset-intensive as paper documents can be lost easily and they start degrading after a certain period.
If that happens then documents will be no good for the auditor. There will be so many documents for each asset such as purchased documents, maintenance-related documents, and so on.
What Is the Solution to Overcome Fixed Asset Verification Challenges?
First, you need to invest in automated asset management software that will help you in the physical verification processes. It will also provide you with alerts and notifications whenever your assets leave the organization's premises.
You can easily keep track of assets with this software. it is also helpful in reducing asset theft and misplacement. within just a few clicks you can know where it is currently located and who is using it. Either it is being used or not used at all.
With this software, you can assign audits to every department and the status is updated on the software so that physical verification can be done easily. It centralizes all the information that helps management in making business decisions. Hence, asset audit process speed also increases. The existence of ghost assets is also minimized, as you are always aware of the asset location.
Moreover, you can easily store all documents of each asset with this software, it also enables you to fetch all information & record any asset within a few seconds.
Asset physical verification challenges are not easy to overcome but any organization can do it with asset management software. It provides several benefits that will make your organization more productive and efficient.
With Asset Infinity’s asset management software, you can easily overcome all the challenges mentioned. It comes with cloud technology which means you can access it from anywhere and you will not have to worry about data security & a cloud service provider will take care of your data.
Frequently Asked Questions (FAQs)
Q.1 - For Asset Verification, How Do Organizations Keep Track of Assets?
In order to keep track of assets for asset verification, asset management software is used along with asset tags or labels are used. On every asset a tag is attached, this tag has a unique identification number that is stored in the software. Whenever this tag is scanned it fetched all the information in a tag. For example, you can know where the asset is located, who is using it, when it will be returned, and what is the current status of an asset. In this way, you can verify each asset's physical location.
Q.2 - What Are the Various Asset Tracking Technologies Available in the Market?
There are several asset tracking technologies available in the market such as barcode QR (quick response) code, RFID (radio frequency identification), GPS (Global Positioning System), BLE (Bluetooth low energy), NFC (Near field communication), IoT (Internet of Things). All these technologies are helpful in asset tracking and some of them provide real-time information and you are always aware of the asset’s real-time location too.
Q.3 - What Are the Benefits of Asset Management Software?
The benefits of asset management software are given below:
1. Fast & effective audit.
2. Asset & inventory tracking.
3. Maintenance scheduling & tracking.
4. Optimized asset performance.
5. Increased asset life.
6. Better return on investment (ROI).
7. Eliminating ghost assets.