Over the last decade, we have found that at a minimum 50% of fixed asset information is either inaccurate or incomplete. Therefore, the only reliable way to verify and validate fixed asset information is to conduct a physical inventory.
All fixed asset inventory data should be centralized and reconciled against the existing data in the fixed asset accounting department. This ensures that fixed asset reporting provides management with accurate assessments of the fixed asset picture across the organization and ensures better compliance with regulatory requirements.
In addition a review and reconciliation of remaining capital assets that are not able to be inventoried, including real property, bulk assets, ghost assets, intangibles, etc, should be done as well.
From a process standpoint, many problems stem from the failure to deploy a consistent methodology and terminology. It is important to follow a standard inventory and reconciliation methodology and to use a standard account reconciliation form. Utilize the same format and content for documenting account reconciliations across all locations within individual business units and at the corporate level.
Independent of planning and conducting a physical inventory of capitalized fixed assets, and depending on the level of risk, you should consider performing reconciliations daily, weekly, monthly, or quarterly.