Assets come and go out of organization premises & this is where the chance increases of assets loss. To keep accurate records, an asset register is required. If you do not use the asset register your business will be impacted badly.
Thus, in this blog, we will know what is the asset register and why it is important to keep accurate data and how it can impact your business! So, let us begin.
What Is the Asset Register?
An asset register is used to keep a list of all the assets belonging to the organization. It is used in accounting for depreciation purposes. It includes details of each asset such as:
- What asset it is
- Where the asset is located
- Purchase Cost
- When the asset was purchased
- Expected asset life
- The depreciated value of an asset
- Maintenance data
- Expected value at the end of its useful life
An asset register is used for accounting purposes. The motivation behind keeping up a register is to monitor the book value of assets and deterioration charged throughout a specific period. An asset register is additionally a valuable method for effectively identifying the items inside the business by allotting a unique ID number to each asset.
Impact of Keeping Accurate Asset Register on the Business
If you do not keep an accurate asset register it will affect your business badly. For example, you will not be able to calculate accurate asset depreciation and tax reports. They are essential to make financial data is precise and up to date as well. This register can record the buy value of a specific asset and depreciation it over the lifecycle of an asset.
Asset register ensures that company assets are compliant according to the tax regulation and always have a transparent view of asset values.
Let us an instance of an IT asset register as it is also effective for monitoring who is utilizing assets like organization vehicles and PCs and whether any adjustment or updates are required or not. This can assist you with ensuring that these assets are stayed up with the latest and running ideally.
What Are the Benefits of Maintaining a Fixed Asset Register?
The benefits of maintaining a fixed asset register are as follow:
- Register assists in letting in know the location of each asset
- what is the current condition of an asset!
- Asset status
- Helpful in matching fixed assets value with the balance sheet
- Comply with statutory needs
- Helpful in the audit process
- The physical verification process is simplified
- Enhances utilization of assets
- Asset procurement and decommission details
Best Practices for Creating Asset Register
The first thing you need to do is remove the usage of the spreadsheet method and pen & paper method as well. In today’s competitive world these methods do not fit into keeping track of assets.
Especially when business is growing. Moreover, it has chances of human errors due to improper logging. The spreadsheet can be used for many things but asset management is one of them!
Use Asset Tracking Software
When you use asset tracking software you will automatically see the difference because when it is implemented it use barcode or RFID for keeping track of asset. Moreover, they are also useful in several other things. It updates the information automatically and minimizes the chances of human mistakes.
We suggest this to most associations since utilizing an automated asset register ensures it’s consistently exceptional and the data in it very well may be trusted to be precise. This spare loads of time as well, you just need to check in sometimes to ensure it’s running appropriately.
Asset Code Number Should Be Understandable
An asset must have simple and easy to understand asset codes so that anyone can understand. In this process, the asset shall be categorized and sub-categorized as well. It will help find assets in asset registers.
You need to ensure that whoever is utilizing your asset register can undoubtedly discover what they’re searching for and have the option to precisely update data if found inaccurate.
Create a List of Assets That Need to Be Tracked
You might be thinking, there’s no reason in tracking assets and data that we won’t utilize. That is not completely true, you need to track all the assets otherwise they might get stolen or misplaced and no one will notice. Furthermore, these types of irregularities hamper the business.
Like we said earlier, assets shall be categorized, assets that need to be monitored for depreciation, taxes, and for keeping financial records up to date, they all can be kept in a critical asset list. Other assets can be kept in the non-critical asset list.
All assets are necessary at the time of audit as they are physically verified so all these collected data & number comes handy at that time.
The concept of asset register is simple but without effective implementation and accurate information, all effort will be null and void. Thus, asset management software is essential meanwhile it also provides several other benefits. For example:
- Keep information and monitor the value of an asset
- Status of each asset
- Depreciation calculation
- Avoid misplacement and asset theft
- Asset history & records
- Value for scrapped assets
Managing asset register can be a hectic job if the software is not utilized. If you want to maintain an accurate asset register then this software is mandatory.
Frequently Asked Questions (FAQs)
Yes, it is mandatory to maintain a fixed asset register in few countries.
No, they are not the same as the stock register maintains information of inventory such as raw material, finished products, etc. On the other hand, the asset register contains information about fixed assets only.
Several types of asset registers exist such as special asset management register (software), digital asset register, IT asset register, etc.