Conducting Physical Inventory – What to Count and How to Tag It

While it may seem straightforward to establish what types of assets need to be counted during physical inventory, most often, it is not. More often than not, the capitalization limit loses focus when individual assets that fall below the capital limit are bundled together as a capital line item on the fixed asset register.

Further, there are often secondary goals beyond verification of capital assets. This can include tracking of expensed assets that meet other criteria, such as:

  • Operational assets that are critical to the organization
  • Small portable items, susceptible to theft and/or misplacement, such as tablets
  • IT assets
  • Assets on loan or funded through grants
  • Leased Assets

Counting diverse asset types often necessitates varying information capture requirements.

So to begin our series, we will look at a few of typical scenarios. Of the utmost importance are capital assets. The next class would normally fall into the information technology arena and include computing and network components. Depending upon the industry and business offering, capital assets may include machinery and tools, scientific equipment and medical devices.

Asset data capture aside (which we will discuss in the next blog entry), the types of asset labels and how they are affixed to these various asset types can vary. Environmental conditions will dictate labeling materials, method of attachment to the asset, and sometimes encapsulation.

These environmental consideration vary from; extreme temperatures, weathering, chemical exposure, to regular abrasion.

The type of label can also vary from a simple bar code label to the use of RFID. Regardless of the type of label, the amount of real estate available to affix the label, the means to do so, and the information to be contained on the label are considerations that must be planned for.