What Is an Asset Register & Why Accuracy Is Important?

Swetha Dhinesh

28 Mar, 2023

Your organisation requires a standard procedure for managing its assets simply and transparently when it comes to keeping track of them. When addressing this issue, fixed asset registers are frequently the first option. One of the essential elements to increasing business efficiency and profits is effective asset management. However, a sizable portion of small and medium-sized enterprises only use manual asset management solutions, including spreadsheets or even paper-based records.
Some companies compromise on effective asset management by skipping the advantages of automated asset registries. A list of your company’s assets, such as property, vehicles, equipment, stock, and other resources, is called an asset register.

It contains a thorough list of all the company’s resources. It maintains a detailed record of all the assets, including their description, current state, user history, location, and many other details. An Asset Registry is a document that keeps track of both the financial and non-financial characteristics of all the assets that are currently owned by the business.

What is an asset register?

A list of all the assets owned by a firm is called an asset registry. It includes details about each asset, such as its location, cost, and condition.

An asset register Can be used to:

• Keep track of the condition of your assets so that you can utilise them as effectively as possible.
• Determine whether the current equipment needs to be upgraded or replaced.

It’s crucial since it enables you to determine how much capital is invested in each of your assets and whether or not they are bringing in enough money to pay operational expenses.

A dynamic inventory of the equipment and assets that your company currently possesses is termed an assets register. An asset register’s job is to keep you in charge of costs and reduce the chance of loss or failure by keeping track of the equipment’s value, location, and condition. Making important business decisions about upkeep, compliance, and capital expenditures should be assisted by an asset register. Asset registers can be kept on paper, in a spreadsheet, or as a separate component of specialised asset management software.

Reason to Create and Maintain an Asset Register

Asset registers aid organisations throughout the entire preventive maintenance process. Big companies may have entire teams of accountants and bookkeepers to handle their assets. But what about smaller businesses?

• Small and medium-sized businesses manage their assets on their own. They might use Microsoft Excel spreadsheets to manage their office supplies and other assets.

• When you first start out and have a few pieces of the essential equipment to run your business, the Excel approach might be effective. But, if you want to expand your company, be prepared to increase the number of computers, communication devices, and cars in your asset base.

• The audit trail expands along with your firm, which leads to more challenging auditing tasks. Take advantage of the automated calculating services to save yourself the effort.

• Small business owners need to implement an effective asset management system to manage their physical assets. Businesses are able to monitor the values of their properties because all the asset information is conveniently maintained in one location.

Benefits of Fixed Assets Register

Your company will gain from having an accurate and current fixed assets registry in a variety of ways. Here are a few of these methods:

• Offers Complete Information – You may access all the pertinent information regarding the location, use, life cycle, and maintenance costs of each firm asset by keeping a register. You may use this information to make informed judgements about how best to use the fixed assets of your business and when to let them go.
• Improving Asset Security – It will offer a company all the data needed to know where an asset is, how it is operating, and how long it will last. You will always know where each asset is and whether it is still working, ensuring the security of these assets and preventing theft or misplacement.
• Evaluates Maintenance Costs – You will constantly be aware of when specialised equipment was purchased if your register is kept up to date. Also, you’ll discover how long it’s been in use, how well it works, and when its anticipated life cycle will expire. It will enable you to precisely project future maintenance expenditures for the equipment that runs your company. It will also make it easier to plan ahead and make a budget for these costs. This will also aid decision-making^[1] for upcoming purchases because high-maintenance assets can be avoided.
• Maintains Depreciation Records – You can determine the actual value of the property and equipment owned by your business with the use of the register. Keeping track of the purchase’s date, price, depreciation rate, and salvage value facilitates it. It will guarantee that the estimates of an asset’s lifetime continue to be accurate. Also, it offers a company adequate time to make substitute arrangements without disrupting business as usual.
• Legal compliance – It gives specific details on the purchase price, depreciation, and current value of each asset. Such details aid in a company’s adherence to legal requirements in your nation. As a result, the company will be able to stay clear of the fines and penalties related to compliance violations.
• Helps in the auditing process – A precise and current fixed assets register will make the audit and verification process easier when auditors examine the company’s accounting records. There may be a variety of errors in the calculation of accumulated depreciation. Some assets were improperly depreciated, some weren’t discounted at all, and some were excessively depreciated. So keeping an assets register will help to overcome these problems.
• Preventive maintenance process: They will undoubtedly make a note of it and establish a maintenance programme if they have all the necessary information, which is quite advantageous for an organisation. It will shield the business from unwelcome workflow obstacles, aid in reducing downtime, and do much more.

How to Keep an Asset Register Consistently Accurate?

• When producing an assets register, it is advised that organisations export all assets included in their accounting or asset management software.
• The following action is to conduct a physical audit of the assets. Physical audits may be simpler if companies have barcodes or RFID tags on their assets.
• They can compare the full list of assets from their asset management or accounting system with the physically audited assets after the audit. Businesses inevitably discover discrepancies between their list of assets and the audited assets. Technically speaking, ghost assets which are often written off, are missing assets.
• After a corporation has established a master fixed assets register, maintaining its accuracy might be difficult. Especially if the assets are continually moving between different places; the majority of businesses will attach tracking labels to their assets so that they can monitor movement in real-time.

Challenges of an Accurate Register?

Spreadsheets are frequently used by businesses to maintain their asset registry. Although spreadsheets can be simple to use, they are not intended to preserve an asset register’s accuracy. The majority of asset-related information is dynamic. Location, user, depreciation value, warranty details, and maintenance history are a few examples.

As a result, it is particularly challenging to preserve a spreadsheet’s correctness when managing dynamic information. In most circumstances, multiple teams will also submit various pieces of information.

This makes trustworthy asset management software very helpful for preserving an asset register’s accuracy. The majority of contemporary asset register software is cloud-based, allowing simultaneous data editing by many teams across several locations.

Conclusion 

To conclude, irrespective of the size of your firm, you are required to keep a fixed assets register. It aids in improving productivity, maximising an asset’s usefulness, avoiding duplicating purchases, and achieving hassle-free auditing. You can conduct a physical audit to ensure that all assets are present if you have an exhaustive list of all assets at your disposal.

Also Read: Asset Management: Alternative Investment Funds