Asset fraud has been an issue for many organizations, and it not only leads to financial losses but also erodes the trust of stakeholders in the organization. Physical verification of fixed assets is one of the most effective methods for identifying and minimizing asset fraud.
This blog will go through the significance of the physical proof of fixed assets, how to perform physical verification with the help of a Business Advisory company in Delhi, and the benefits of physical asset verification.
The significance of physically confirming fixed assets
Fixed asset physical verification is a procedure used by auditors and business owners to ensure that the assets listed in the organization’s financial records exist. This process can help identify ghost assets, assets that are not recorded or included in the accounts, and assets that are not accurately valued. Physical verification also helps maintain accurate records and compliance with regulatory requirements.
How to perform physical verification of assets
The physical verification of fixed assets involves a line-by-line reconciliation of fixed assets accounting records to assets found during the physical inventory. Audit staff should use asset tracking technology to identify each support and location. It can include barcodes, QR codes, RFID, GPS, BLE, NFC, and IoT tracking technology. Asset tags with unique identification numbers should be attached to each asset for accurate identification.
Benefits of physical asset verification
There are numerous benefits to performing physical verification of assets, including:
- Accurate asset numbers: Physical verification helps ensure that the organization has accurate asset numbers and can track them properly.
- Avoid asset theft and misplacement: Timely verifying assets helps reduce the risk of theft or loss.
- Asset location: Physical verification helps to ensure that assets are located in the right place at the right time.
- Eliminate ghost assets: Ghost assets are recorded in the financial records but do not exist physically. Physical verification helps to identify and eliminate ghost assets, reducing the risk of financial losses.
- Maintain compliance: Physical verification helps to ensure compliance with regulatory requirements, such as asset valuation and depreciation.
- Maintain asset records: Accurate asset records are essential for making informed decisions and developing strategies for business growth.
Conclusive Statement
Physical verification of fixed assets is essential for identifying and minimizing asset fraud. It helps to maintain accurate asset records, reduce the risk of asset theft and misplacement, and maintain compliance with regulatory requirements.
By accurately tracking fixed asset valuation, organizations can ensure that the assets listed in the financial records are accurate and can be appropriately valued. It will enable organizations to make informed decisions and develop business success and growth strategies.
Furthermore, physical verification can help reduce the risk of fraud, waste, and abuse and help ensure that assets are protected from undesired access. Finally, physical asset verification can help lenders assess risk and accurately make informed credit decisions.