Fixed Asset Management Service
Fixed Asset Management Service
Fixed Assets are the investment made by a Company in a tangible form, which is used for its operations to generate revenue. In manufacturing companies, fixed assets like machinery, plant and equipment can be considered as the backbone of the company. The effective and optimum utilization of assets steers a company to success.
Fixed assets, as the name suggests, are fixed or permanent investment of a company and is expected to be in use for more than a year. Replacements, maintenance and/or additions are imperative for maintaining the assets for the long term. Fixed assets, being of high value, call for proper internal controls to be in place to ensure that the assets are maintained and used in the best possible way.
In midst of all the general business operations, it would be difficult for the management to monitor the maintenance of assets, thus resulting in a huge loss of investment through major repairs / frequent replacements.
Fixed Asset Controls
The following controls will have to be kept in place to ensure that there is no loss on account of assets:
- Maintain asset registers detailing the description, quantity, location, and depreciation rate
- Physical verification of assets at regular intervals to ensure there is no theft/fraud associated
- Discussion with management in case there are discrepancies with the asset list
- Third-party Fixed Asset audit, if the discrepancies are huge.
We GSPU team provides you Fixed Asset Management services ensuring that your fixed assets are properly maintained. Our services include:
1. Support in maintenance of Fixed Asset Register
We can support the management in maintaining the Fixed Asset Register and ensure the register is maintained at all Inter – Companies and Head Office. The Register at HO will include details of location, custodian of the assets, date of purchase, item code, voucher number, cost, depreciation, depreciation charged, details of disposal (if any), assets reference number, etc. The Registers at Divisions will include fixed asset code number, date of purchase, cost price, transfer/disposal/sale details with a date.
2. Review of Fixed Asset Register maintained by the Client:
The fixed asset register maintained by the client will be reviewed by us and corrections if any will be suggested to the management. We will ensure that the Register includes all the necessary details required in maintaining the assets satisfactorily. The location mentioned in the register will be cross verified to the extent possible and ensured that the management has good control over the assets. The existence of assets mentioned in the Register will be verified physically by our team and noted in the register to the extent possible.
3. Training the staff on the process for raising indent
The team will be briefed on how the request for a new fixed asset has to be raised, mentioning the list of existing fixed asset of the same type, need of purchase and estimated cost of requested purchase. An analysis will be prepared by the division manager detailing the name and address of suppliers, description of items, cost, payment terms, credit period and justification for the selection of the supplier.
4. Supervising the accounting of Fixed Assets
The accounting of fixed assets will be supervised ensuring ledger creation for each asset class, computation of depreciation, proper accounting for acquisition and disposal of assets. The different asset classes would include Furniture and Fixture, Tools and Equipment, Computer/ Software, Building, etc., according to the nature of business. The Depreciation rate will be fixed on discussion with the management, taking into consideration the nature of the asset, type of usage and replacement value analysis. We will supervise the entries entered by the accountant ensuring compliance with IFRS.
5. Accounting of Revalued Assets
We will ensure that the assets revalued by the qualified valuer are accounted appropriately with proper allocation to the revaluation reserve. We will also verify the calculation of revised depreciation on these assets, ensuring that the same is accounted as per the Standards.
6. Proper classification of Capital work-in-progress
We will ensure that the capital work-in-progress is transferred to the relevant asset head on completion, expenses are classified and allocated appropriately, and the total value of the asset will be re-computed ensuring that the accurate value of an asset is reflected in the books. We will cross verify that the expenses are directly attributable to the definition of fixed assets and other expenses are written off and the timing of the transfer of assets from WIP is also verified.
7. Asset Tagging
We can support the client in tagging the fixed assets by tagging each asset with unique asset Barcode/ RFID and the system will be updated with physical location details. The assets tagged will be matched with the existing list of assets and the variances will be pointed out, if any. The initial effort and cost incurred on asset tagging will reap continuous benefits as it will mitigate the loss or theft of assets and provide a full trail of assets.
8. Physical Verification
Our team will visit your premises and conduct verification of fixed assets, ensuring that the assets reflected in the books are existing in the company’s premises/custody. We will also assess the control procedures in place, compare it with best business practices, conduct a gap analysis and provide a report on changes to be incorporated.