Identifying and valuing long-term assets for a fixed asset register is a time consuming but essential job for any company to apportion depreciation and avoid fraud. Prasanna Kulkarni, founder of Comparesoft, provides tips on how to get started
Businesses tend to maintain a register of fixed assets only when they need to for compliance or accounting purposes, whereas an accurate register can impact maintenance, service, procurement, and auditing costs and processes.
Here are some useful tips on how to build an asset register using simple methods.
1 Understand the need for an asset register
The first step is to understand the importance of an asset register. What purpose will the register serve and what will it be used for? In general terms, asset registers are used for several purposes, including:
- prepare an accurate audit;
- for apportioning depreciation amount to company assets;
- to make insurance warranty claims for the loss or damage of an asset;
- to plan maintenance schedules;
- to identify non or underperforming assets;
- to identify individual assets by name, value, and location;
- for performance improvement purposes;
- to comply with statutory requirements; and
- to prevent fraud.
2 Establish a hierarchy of all assets
