In Managing Physical Assets, It’s Not Just About Fixed Assets
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Many organizations equate tracking physical assets with fixed asset management.
So they track physical assets in their fixed asset management system. In their fixed asset management system, they:
- Record purchase prices, and funding sources
- Add barcode information and location information to assets
- Record depreciation
However, there are two critical problems with that approach.
Problem 1: The system can’t track everything
The first problem with this approach is that fixed asset management systems typically can’t track everything that you need to track with physical assets.
Fixed asset management systems are mainly designed for managing financial information, such as purchase prices and depreciation. They can’t track the life-cycle information of these assets, such as asset moves, or check-in and check-out.
That’s why many organizations have problems with “zombie assets” – assets in the books but couldn’t be found anywhere. When you don’t record asset life-cycle information, it’s very easy to lose physical assets.
By only tracking physical assets in a fixed asset management system, you are very likely to lack critical information and may even lose your assets.
Problem 2: Some physical assets aren’t fixed assets
The second problem is that many physical assets that need to be tracked are not actually fixed assets.
Fixed assets are typically defined as assets above $5000 in acquisition prices. However, a lot of assets of any price grade require ongoing tracking.
Some examples include:
- All Government Property, including Government Furnished Property and Contractor Acquired Property, require tracking. The cost of purchase is not relevant. It is a requirement by FAR/DFARs.
- All equipment purchased with certain types of grants will require tracking. Some of our customers who receive FEMA grants have these requirements.
- Most high education institutions have assets that require tracking but under $5000 threshold, called “controllable.” These controllable can be laptops containing sensitive information, guns or other weapons, etc. Recently, the state of Utah issued guidance for tracking noncapital assets. The guidance specifically outlined which types of noncapital assets need to be tracked.
4.1. Noncapital Asset Inventory: Each institution shall affix an asset tag with a unique identifier to, and maintain an inventory of, the following non-capital assets:
4.1.1. Assets with an acquisition cost greater than or equal to $3,000.
4.1.2. Institution-owned computers and laptops that may contain PII at any point during the institution’s ownership of the asset. (PII is Personal Identifiable Information)
R572, Noncapital Asset Inventory and Tracking
Even if they are not capital fixed assets, these physical assets should be tracked and monitored.
A physical asset management plan should include at least the following:
- Maintaining updated records of inventory
- Tracking chain-of-custody and annual inventory audits
- Reporting missing or stolen assets promptly
- Reporting disposition of assets
These minimum requirements ensure physical assets are managed effectively, decreasing the number of “zombie assets” and increasing adherence to any regulations like those mentioned above.
As you can see, managing physical assets has different requirements from fixed asset management.
Organizations need to review their requirements, policies, and procedures to ensure they are managing their physical assets effectively.