The fixed asset inventory process is often steeped in tradition; following policies that have been in place for years, without regular review, and seldom, if ever, compared directly with the practices at leading peer companies.  However, because the process directly impacts every business unit, a periodic review of the existing fixed asset policy is always a good idea.

Recently, a Peeriosity member from a large global company wanted to understand how the asset verification process was performed at other companies as part of a review of their current process.  The member used iPolling^TM to create questions that were quickly responded to by peers from the Fixed Asset departments of member companies, giving her direct insights into the issue, with the ability to follow up directly with peers as necessary for clarification. 

The first polling question asked about tagged assets.  At 62% of the companies a periodic physical inventory is performed, with responsibility for the count often delegated to the department where the assets are located (and not performed by members of the Fixed Asset team).  Another 14% of member companies perform a cycle count, and 14% do not perform asset tagging.

For assets that aren’t tagged, 50% of member companies perform periodic physical inventories and 17% perform a cycle count.  33% of companies don’t physically verify untagged assets. 

Here are some additional comments from respondents:

• We use a combination of cycle counts and periodic physical inventory counts by company employees. Individual operating units determine which method to use.

• We require that all assets be tagged.

• For tagged assets, we utilize a 3rd party to perform an annual count as of a point in time. This is typically carried out during 4Q as part of our year-end controls. In addition, for those assets that are not tagged, we utilize various processes such as 1) Contacting equipment/software owners to inquire if they are still in use 2) matching of description, model #, serial #, etc. to a 3rd party report (this is done in conjunction with the 3rd party physical as we have non-taggable assets in service) 3) and physical observation by company employees on site. We have a mix of manufacturing equipment and software/hardware in various locations so a one size fits all approach does fit well.

• Company policy requires each location to conduct a full fixed asset inventory once every three years.

• In most cases, the assets are tagged by our own employees.

• We have a company requirement that all fixed assets be physically verified on an annual basis. The inventory is performed by company employees. The results are approved and submitted for processing and tracking purposes.

• We require all highly portable assets to be tagged. Physical inventory must be done annually by the cost center owner, but they can use third-party resources if they wish, can perform on a cycle basis throughout the year, and can perform the inventory on a sample basis as long as they cover all high-risk/high-value equipment in the sample throughout the year. Assets that are easily recognized for identification purposes and can easily be recognized as in service or not (such as buildings and building systems) do not have to be tagged or specifically inventoried as part of the annual physical inventory.

How often does your company perform a review of your fixed asset policy?  How often do you conduct a physical inventory of assets and what process do you follow?

Who are your peers and how are you collaborating with them?

 “iPolling^TM” is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from participating or accessing content. Members have full visibility of all respondents and their comments. Using Peeriosity’s integrated e-mail system, Peer Mail^TM, members can easily communicate at any time with others who participate in iPolling.