ReconciliationMethods

As discussed earlier in this blog series, the first step in reconciliation consists of exact matching of physical assets to logical records using unique identifiers, such as the manufacturer serial number. Once all possible matches are made using this means, additional analysis is done and matches are made using various means.

One means entails using a second-level process encompassing a set of assumptions. This typically entails using information that would be attributable to a group of assets, but not a single asset.

For example, a manufacturer model number. Here, the assumption is that because a logical record indicates a model of XYZ and a physical asset was found with the same model designation, they are one and the same asset. The risk with this assumption is that there are more than one XYZ assets and that the association being made is matched to the incorrect one.

The impact this can have is perhaps matching an older XYZ asset to a newer XYZ logical record. The older physical asset could be at end of life while the logical XYZ record may represent a newly acquired asset.

However, let’s consider a scenario where 10 logical records are representing of the XYZ model type and that you have physically counted 10 assets of the same model type. Clearly you have all 10 assets installed as reflected on the financial records.

The problem comes about if you elect to retire or upgrade any one of these XYZ assets. The adjustment being made is somewhat random as you have no means other than the model number to identify which of the 10 assets must be adjusted.

Additional leg work can be done whereby physical documents are researched such as purchase orders, packing slips and invoices. These documents often will contain unique information specific to a given asset such as a serial number. A review of these types of documents may help identify when a particular asset was purchased and received.

Comparison is then made to the register using both the model number and the date. This level of matching, which certainly requires more effort, provides a more reliable method of reconciliation.

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