Physical verification of fixed assets is essential to maintaining accurate financial records and preventing losses due to theft or mismanagement. However, businesses often need help determining how frequently they should physically verify their fixed assets. In this blog, we’ll explore some factors that can assist you in deciding how often you should physically inspect your fixed assets.
- Nature of business: The frequency of physical verification of fixed assets depends on the nature of the business. For example, businesses with high-value assets, such as manufacturing units or IT companies, should conduct physical verification more frequently than service-based businesses.
- Size of the company: The company’s size is another crucial factor in determining the frequency of physical verification of fixed assets. Larger companies with more assets may need to conduct physical verification more frequently than smaller companies.
- Risk assessment: Conducting a risk assessment can help determine how often you should physically verify your fixed assets. Businesses operating in high-risk environments or with a history of asset loss or theft should complete physical verification more frequently.
Changes in fixed asset management:
- Physical verification of fixed assets may be required due to modifications to fixed asset management, including adjustments to the asset management team or the accounting system used to track assets.
- Compliance requirements: Compliance requirements can also impact the frequency of physical verification of fixed assets. For example, some industries have legal requirements mandating that businesses physically verify their assets at specific intervals.
- External audit requirements: Businesses’ fixed assets may need to be physically verified by external auditors as part of the auditing process. The auditor’s requirements may determine the frequency of physical verification.
Safeguarding your fixed assets
- Outsourcing physical verification of fixed assets to fixed asset management companies can provide businesses with professional expertise and streamline the process.
- Fixed asset management companies offer various services related to improved asset management, including physical verification of fixed assets.
- These companies use the latest technology to track and manage fixed assets, making the verification process more accurate and efficient.
Ensuring accuracy through physical verification
Physical verification of fixed assets is vital in maintaining accurate financial records and preventing losses. Determining the frequency of physical verification depends on several factors, including the nature and size of the business, risk assessment, compliance and audit requirements, and changes in fixed asset management.
Outsourcing the process to fixed asset management companies can provide businesses with the expertise and technology necessary for efficient and accurate physical verification.
