Management of fixed assets is essential for firms of all sizes as it helps in effective financial planning, budgeting, and decision-making. It involves tracking, maintaining, and verifying a company’s physical assets. However, the physical verification of fixed assets is complex and challenging. This blog will discuss the significant challenges faced in the physical proof of fixed assets and the solutions to overcome them.
The major challenges that occur in fixed asset physical verification:
- Long hectic process: Physical verification of fixed assets is lengthy and tiring. It involves identifying and locating each help, recording its details, and verifying its existence. The process can be time-consuming and may require a significant amount of resources.
- Ghost assets identification: Ghost assets are reported in the company’s books but not present. These assets may be stolen, sold, or scrapped, but their details remain in the records, leading to inaccuracies and discrepancies in financial statements.
- No systematic approach: Often, companies do not have a systematic approach to managing their fixed assets. They may lack proper policies and procedures, making tracking purchases difficult. It can result in errors in financial statements and non-compliance with regulatory requirements.
- Pen and paper method: Manual recording of asset details using pen and paper is prone to errors and omissions. Managing and updating asset records is also challenging, leading to inconsistencies and inaccuracies in financial statements.
What can be done to solve the problems with fixed asset verification?
- Take assistance: Fixed asset management companies offer comprehensive solutions for managing fixed assets. They use advanced technologies like RFID, barcoding, and GPS to track and verify assets accurately. They also provide end-to-end services, including asset tagging, data entry, reconciliation, and reporting.
- Adopt technology: Technology can simplify physical verification by automating asset tracking and confirmation. Fixed asset management software can record and manage asset details, schedule audits, and generate reports. It can save time and resources and ensure accurate and up-to-date records.
- Conduct regular audits: Regular audits can help identify and rectify errors and discrepancies in asset records. It also ensures compliance with regulatory requirements and helps in better financial planning and decision-making.
- Seek business advisory: Business advisory services can provide expert guidance on fixed asset management policies, procedures, and best practices. They can help companies develop a systematic approach to managing their fixed assets, ensuring accuracy and compliance.
SAY GOODBYE TO GHOST ASSETS AND HELLO TO ACCURACY
Fixed asset management is critical for businesses to ensure accurate financial reporting, regulation compliance, and effective decision-making. However, the physical verification of fixed assets is complex and challenging. The challenges discussed in this blog can be overcome by adopting advanced technologies, seeking expert guidance, and conducting regular audits. Fixed asset management companies in India can provide end-to-end solutions for managing fixed assets, ensuring accuracy and compliance.
