The importance of fixed asset register in an organization cannot be over emphasized. You simply lose sight of your valuable asset if there is no well organised register of your fixed asset. This article briefly discussed some importance of having a working fixed assets register in your small business.
FIVE IMPORTANCE AND BENEFITS OF FIXED ASSET REGISTER
Assists in both short and long term planning: a well prepared fixed asset register is a valuable planning tool. You can use simple spread sheet like excel to sort fixed assets using any criteria like the date of purchase for example to make replacement decision. You can also classify and categorise your assets your assets in your fixed asset register during impact analysis of risk assessment so as to identify those resource that require that extra bit of security and care. The list of planning insights and benefits that you can get from having a full fledge asset register is endless.
Help in preventing and detecting fraud: good internal control require that we have physical control over our resources. Now, how do you go about implementing control measures if there is no record of what you own? Fraud has no place in an organization that has a repository dashboard that keeps track of resources which it has control over. An employee will be wary of committing corporate fraud if he or she is aware that there is control in place to catch up with his or her act.
Helps keep things organise: An important function of management is to ensure that organization’s assets are safeguarded from any threat that would hinder the company from achieving its objectives. This important function of management cannot be achieved if there is no organized way of tracking the movement of assets.
Helps ensure compliant: some nature of businesses require that certain machines are regularly serviced and inspected. Detailed information about the inspection is included in the fixed asset register and this serves as evidence of compliant. Also, banks would demand to see your current asset register in some cases before making a decision of whether to extend credit facility to you or not.
Saves cost: all of the above benefits and importance of having a fixed asset register contribute towards reducing cost. The auditors for example would tend to charge less if they are convinced that internal control of an organization are adequate. An up-to-date fixed asset register would serve as audit evidence that an auditor need to express opinion on the credibility of a financial statement.
The importance of asset register as you have seen in this article cannot be swept under the carpet without repercussion. Successful businesses appreciate the importance of fixed asset register from the very beginning of their business venture. Your reputation as a company would also be on the green side (that is you will be seen as a credibly run business) if you maintain a transparent list of the resources you have control over. There are many decently priced good accounting softwares out there that you can use for tracking your fixed assets.