Reflecting On Fixed Asset Accounting
I was out sick with pneumonia for the first time in my life and it sucked. I am used to moving and working at warp speed, always. Stuck in bed, bored, and feverish… what’s a person to do? Reflect on fixed asset accounting? Perhaps, but not just ‘fixed assets’ in general… specifically, the trials and tribulations of fixed asset accounting and procedural workflow.
Trials and tribulations? In fixed assets? YES! There are plenty of reasons that fixed asset accounting, tracking, management of, or lack of policy and procedures would give anyone a test of patience…
Everyone who calls me to chat about their fixed asset projects always mentions (at some time or another) that they have implemented polices, only to have turn over or misdirection occur. In some instances, a real nightmare of mismanagement. My response is always the same… you are not alone.
20 years into my fixed asset career, never have I seen or witnessed first-hand a perfect fixed asset process, spreadsheet, tracking or a way to dispose of assets properly. In some cases, even their automated depreciation solution is not implemented correctly, or doesn’t meet all of their fixed asset management requirements. Good for me, otherwise I would probably be out of a job (that I totally love and have an insane passion for).
Many businesses assume that fixed assets can be put on the back burner since there is no immediate ‘issue’ or ‘importance’ to put the effort or investment into… that is until there is an issue.
Typical ‘immediate’ reasons to jump on making fixed asset management a priority:
- Year-end, tax season
- Property tax bills and/or assessments
- Merger and acquisition is about to take place (or has already finished)
- Some sort of a disaster occurred, and an insurance report is needed
- The most common… the auditors are coming!
My recommendation? Obviously, don’t wait until the end and then you have to scurry around to button up your fixed asset sub ledgers.
- Implement automated solutions that are right for your business – no more spreadsheets and manual processes, please! Along with automated depreciation solutions, integrations and automated workflows do exist. Do your homework and ask around. Never take one answer as the answer.
- Finalize and follow up with real action on your fixed asset management policy and process workflow. As I have mentioned in previous posts, make sure to involve other departments.
- Keep training and updating. Turn over happens, too much with fixed asset management. Make sure you keep training and updating your new hires on the process, so things don’t get crazy and forgotten.
- Whenever necessary… consolidate your internal GAAP and TAX books. You will be glad you did. If you have invested in the right fixed asset accounting solution, Tax, State and AMT should be part of the deprecation books that are kept. Every time I get my hands on both GAAP and outsourced (or in some cases, just separate internal systems) tax, state and AMT sub-ledgers, they never reconcile and roll forward. Many times, assets are entered in differently, inaccurately, placed in service dates are incorrect, and disposals are not processed or processed the same.
- Be proactive! When you are on top of your fixed asset management and have a clean sub-ledger, the cost of ownership and management ends up being less expensive than waiting for a ‘immediate’ reason (as mentioned above). I am here for you, when you are ready.
To recap, you are not alone, be proactive, and keep smiling out there… fixed assets can be fun!