Executing regular audits of fixed asset inventory is a good way to make sure that a company’s asset records are accurate. Inaccurate asset records will affect financial balance sheets, losses may occur and fixed assets may not be available when needed. In a post on Wasp Barcode’s Blog, Brian Sutter explains the building blocks of an effective fixed asset audit.
The audit process does not have to be difficult or time-consuming.
- Accurate Financials
If your asset records are not accurate, your balance sheet will be incorrect. This can be extremely detrimental to a company. Fixed asset reporting is an intrinsic part of the balance sheet.
If your company’s fixed asset listing is considerably different than what is detailed, there is a significant problem with the process of managing your company’s assets.
Additionally, companies and organizations that depend on their fixed assets are able to immediately correct asset management problems by regularly conducting thorough asset audits.
- Audit Principles
However you choose to complete the audit, the basic principle is the same:
- Look at your last audit numbers.
- Determine your current audit numbers.
- Ensure that the difference coincides with your transaction reports.
The amounts listed on your balance sheet should match the detailed listing of your fixed asset inventory. When comparing the two, verify the following is true about each asset:
- The asset is valued correctly.
- The asset has been classified correctly.
- The asset’s purchase and/or sale dates are accurate.
In addition to the information listed above, you should also have all applicable documentation and ownership information for each asset.
Questions? Comments? Let us know in the comments section below.
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