Part 3: Fixed Asset Management Policies and Procedures
In parts 1 and 2, we discussed conducting the baseline physical inventory of fixed assets and and addressed automatic data capture technologies.
In this post, we will discuss (at a high level) putting it all together with Fixed Asset Management Policies and Procedures. Policies and procedures essentially encompass all aspects of the asset tracking and management program.
Many of our clients come to us with a specific need or problem, such as reconciliation of their fixed asset register. Upon further discovery, it becomes apparent that while this will resolve their immediate requirement (and is a necessity), without implementing some fundamental changes to their asset management program, they will likely end up in the same position and with the same problem in a years’ time.
Getting a baseline physical inventory and and tagging your assets is a great start (and also a necessity). Reconciling the fixed asset register keeps you compliant with regulatory requirements.
However, if you don’t make some fundamental changes in the way you are managing your assets on an ongoing basis, these snapshots in time will eventually become outdated and you will wind up right back where you are.
This isn’t to say that there won’t be a need for physical inventory and reconciliation next year, but it will likely be a much cleaner, simpler, and more cost-effective process.
To establish a useful set of policies and procedures, you must first look closely at how things are currently done.
There are a number of diverse roles that have a direct impact on how an asset is managed and tracked throughout its useful lifecycle. While there is no one size fits all process for management of assets, there are common trends and typical process flows amongst most organizations.
The process should begin with an asset lifecycle assessment and discovery phase. The assessment should look at all of the processes that impact fixed assets across their useful lifecycle.
Here are some high-level steps that we take with our clients;
Stakeholders and gatekeepers are identified. There are various individuals/roles that will have an impact on an asset at different stages throughout its useful life. This will vary from one organization to the next depending on the internal resources available, but often include; procurement, finance, receiving, operations, custodians, and more. Each role represents a point of control.
What will happen when the asset is first purchased? What about when it is received? When will the asset be tagged and entered into the asset tracking system? Who will take cyclical physical inventory audits? What is the process for disposal? These (and many more) are all considerations that need to be addressed, documented (formally), and followed through.
Conduct a review existing checks and balances you have in place. There are likely gaps in this area.
Identify sources of information. Leverage all available databases and data sources, including; ERP systems, IT/Help Desk, CMMS, facilities, and financial records.
This is also a good time to consider implementing technology where it will be useful. We talked about automation in Part 2. Having access to bar coding and or RFID technology will greatly enhance your asset tracking program.
Once discovery is completed, establish control and integration points. We talked about roles. Set additional definition to the controls and points of integration exist throughout the asset lifecycle? This ranges from processes involving physically touching an asset to integrating information about the asset across different systems.
Refine information flows. Integration and automation of data flow between systems and departments can reduce redundancies and help keep disparate systems up-to-date.
Establish reliable monitoring of the program.
PLOTTING YOUR MATURITY PATH
Plot your current position into a model. Are you in a proactive or a reactive state?
Plot your future position with desired milestones and timelines. Where do you want to be and how long will it take you to get there?
Compile established process adjustments and associated schedules.
Prioritize implementation stages and IMPLEMENT.
When the review and assessment has been completed, you have established the various roles, technologies, processes, and timeline, create a formal Policies and Procedures document to ensure alignment of the program. Be sure to include;
- Approach and findings of the assessment
- Identify established standards and conventions
- Refined process flow at control points
- Information sources, dependencies, and key points of integration
- Internal controls
- Roles and responsibilities
Contact us to learn more about developing best practice Asset Management Policies and Procedures in your organization.