Verification of Tangible Assets
Asset Identification and/or Asset Verification Processes
Asset Verification Process
A physical verification of assets is a process that is used to determine that the assets in the Asset Register are in fact in the possession of the company. Usually, the goal is confirm the physical existence of the assets and ensure that they are accounted for.
But that is only part of the process. For insurance purposes, you need to verify that the records match the asset's nameplate detail. Apart from the engine, gearbox and differential, the remaining part of a vehicle could have over ninety specification fields that have to match. Make, type, model and serial numbers are simply not enough.
Asset Management Framework
In our February 2015 newsletter, we have included 10 questions to recognize the state of your current Asset Register. We also mentioned that having a Fixed Asset Register (FAR) is a statutory requirement in terms of the Companies Act; and that it is one of the areas external auditors MUST and DO focus on.
The objects of the Government Immovable Asset Management Act – Act 19 of 2007 – are to:
- provide a uniform immovable asset management framework to promote accountability and transparency within government – see the above image as an example of what it is important as regards the Asset Management Framework;
- ensure effective immovable asset management within government;
- ensure coordination of the use of immovable assets with service delivery objects of a national or provincial department and the efficient utilization of immovable assets;
- optimize the cost of service delivery by:
- ensuring accountability for capital and recurrent works;
- the acquisition, reuse and disposal of an immovable asset;
- the maintenance of existing immovable assets;
- protecting the environment and the cultural and historic heritage; and
- improving health and safety in the working environment.
This has to be done thoroughly to ensure that each and every asset is identified. If the correct processes are followed, it would not be necessary to repeat this afterwards.
Because of the expense involved, it is generally avoided, which means that any of the steps that follows is lacking subsistence, and, essentially, meaningless.
The Asset Register is a key to understanding in detail what assets are owned and controlled and, depending on the complexity of information entered, can be used to determine:
- The likely current condition of assets;
- When assets need to be replaced;
- Information required in meeting accounting standards and other regulatory requirements;
- Asset locations and asset custodians for stock-takes;
- The level and frequency of asset maintenance programs; and
- Life-cycle costs by asset, program and business activity.