Annual auditing of financial statements offers financial transparency and accountability for nonprofit organizations. While not all nonprofit organizations are required to conduct an independent financial audit, many are. Those that are not should still strongly consider one. This is encouraging and often required of financial donors.
A key component in financial reporting for any organization is fixed assets. Accurate reporting on fixed assets requires regular review and reconciliation of the fixed asset register (subledger).
One common concern that most of our nonprofit clients share is tracking which fixed assets are purchased from different grants and funding sources. Assets are often received, deployed, intermixed, and utilized throughout the organization as intended regardless of the funding source. This causes problems with year end financial reports and becomes increasingly more difficult as time goes by.
The simplest means to tracking fixed assets and their funding source is to record the asset into an asset management system as it is received. At this time, it should be fairly easy to identify the . The asset can then be asset tagged and deployed/utilized as intended. Conversely, if an asset is retired/disposed of, the system is also updated accordingly. This process will also lend itself to Month End Close activities, annual reporting, and ultimately pass audit.
However, this is all too often not the process flow that is followed. Assets are more commonly received and deployed throughout the organization without properly recording and asset tagging.
In order to later account for the asset and report it against the appropriate funding source, additional efforts must be made in the way of physical inventory and reconciliation of paper trails. While this is a viable process, and one that we frequently employ, it is more time consuming and labor intensive.
Verasset offers a solution to nonprofit organizations that enables proper management and reporting on fixed assets. The solution combines the necessary tools, services, and processes to automate and simplify fixed asset reporting requirements. While there is no one-size-fits-all solution, it often entails a combination of;
- Asset Management Software / Application (with desktop and mobile capability)
- Tracks basic asset information such as Make, Model, Serial Number, asset location, depreciation, funding sources, etc.
- Mobile Computing Devices with barcode scanning capabilities
- This enables cycle inventory counts, receiving/adding new assets, check in/out of borrowed assets, and disposal of end of life assets
- Physical Inventory, Asset Tagging, and Reconciliation Services
- This can be performed as a one-off baseline service, annually, or less frequently as needed
- Asset management Best Practices Consulting – Formal development of policies and procedures
- Having a formal Asset Management Policies and Procedures document is the basis for the entire program. This document formalizes the processes that will be followed throughout the organization.
With the right tools and processes in place, NPOs can receive assets, record them into the tracking system, and tag them prior to deploying. They can then conduct periodic cycle inventory counts in line with established policies. This will enable proper tracking, depreciation, management, and reporting of fixed assets across various grant funding sources. Verasset professionals can provide periodic auditing of the program on an annual or biennial basis as needed.
The primary objective is to align with financial reporting requirements. However, having these tools and processes in place will provide a wide variety of benefits beyond financial reporting, to include;
- Improved asset visibility and utilization
- Eliminate redundant spending through asset discovery and redeployment
- Securing sensitive electronic data
- Reduced theft for high risk items
Contact us today to learn more about our NPO Fixed Asset Management Services