Verification of Tangible Assets

In one of our previous newsletters, 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 must be done thoroughly to ensure that 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.

Please contact Agulhas Utilities Corporation for more information on any aspect mentioned in this newsletter or if you require more detail regarding our services.