When dealing with fixed assets, the two keys to ensuring proper internal controls in this area are having an accurate fixed asset master file and being able to determine the location of the asset itself. To accomplish this verification and reconciliation, the use of fixed asset tags is a critical success factor, along with a verification of the physical assets on a periodic and consistent basis.
For most companies, assets are physically tagged as they are acquired, either by a centrally located organization or through designated representatives located in the various company locations. A tag can be in a variety of forms and materials, and be as simple as a number on a sticker, as a bar code, or even as an electronic transmitter. The tag number then becomes the primary identifier in the fixed asset master file and enables the preparation of the inventory verification report.
One relatively new technology in the asset tagging space is Radio Frequency Identification (RFID). The major advantage associated with RFID is that you do not have to have a direct line of sight to the asset since your tag reader can still work while being several feet from the tag. Conversely, with barcode tagging, the beam from the barcode reader must be directly aimed at the tag. While the RFID technology is more expensive, in some situations it might be the best alternative when assets get moved around on a frequent basis.
Recently, two of Peeriosity’s member companies used the iPollingTM technology to create polls related to fixed asset tagging. The first question from these polls that we will look at relates to the type of fixed asset tag being utilized. Reviewing the results, the traditional sticker tag (38%) with just an ID number is still the most popular type of tag utilized, followed by the barcode tag at 24% of the companies. 14% utilize a combination of tag types (which, for some, includes RFID technology), while the remaining 24% do not tag fixed assets.
The next poll question related to how the creation of asset tags, and the subsequent physical tagging of assets, are performed at the companies participating in the research. The most popular approach (41%) is the hybrid design, where the tags are acquired/printed in a central location and are then sent to the business units for the physical tagging of the asset. This is followed by the decentralized design (29%) where the business units are responsible for the entire tagging process. Just 8% of the companies handle this process at a central location, likely because the placement of the tag on the assets can be problematic if the company has a large number of physical locations.
Some of the comments from these two polls include the following:
Healthcare, Pharmaceuticals, Biotech Member: Tags with bar code scanning capability are purchased by Financial Accounting from a 3rd party and are then sent to the site for tagging by local personnel.
Consumer Products & Services Member: We don’t have one consistent process across sites (mix of bar codes and manual).
Healthcare, Pharmaceuticals, Biotech Member: We let each location tag however they want, so we use multiple types.
Agriculture & Mining Company: No standard operating procedure is in place for physical tagging of assets; location managers are responsible to review their property ledger on a regular basis.
Healthcare, Pharmaceuticals, Biotech Member: We have centralized locations that send asset tags to the individual BUs when assets are created, but we only tag movable lab items, equipment, and machinery.
Consumer Products & Services Member: Some sites use sticker tags – others use bar code tags or RFID tags.
Real Estate & Construction Member: This varies depending on the type of equipment. For large equipment we use decals. For smaller equipment, we use printed labels.
Healthcare, Pharmaceuticals, Biotech Member: Tag printing is managed centrally by Fixed Assets and sent to respective business contacts across the globe.
How satisfied are you with your company’s current approach to the tagging of fixed assets? Is there an opportunity to make this process more efficient and effective through improved technology or process design?
Who are your peers and how are you collaborating with them?
“iPollingTM” is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from participating or accessing content. Members have full visibility to all respondents and their comments. Using Peeriosity’s integrated email system, Peer MailTM, members can easily communicate at any time with others who participated in iPolling.
Peeriosity members are invited to log into www.peeriosity.com to join the discussion and connect with Peers. Membership is for practitioners only, with no consultants or vendors permitted. To learn more about Peeriosity, click here