AssetWorks Fixed Asset Inventory Management Quick Guide

QUICK GUIDE
Fixed Asset Inventory Management
For more information visit, www.assetworks.com Copyright © 2014 AssetWorks Inc. All Rights Reserved.

For many companies, fixed assets represent a significant investment and include everything from desks and tools
to computers, printers, and other equipment. Some organizations must adhere to government regulations for
tracking and reporting on fixed assets. However, aside from regulatory compliance, there are also many benefits
to having comprehensive fixed asset management practices in place.
In this Quick Guide, we will explore the fundamentals of fixed asset management with a focus on the inventory
process. Throughout the guide you will find several tips for helping your organization establish and execute an
inventory plan. For easy reference, the Quick Guide has been divided into multiple sections as listed below.
SECTION 1 ‐ Overview of Fixed Asset Inventory Management
SECTION 2 ‐ Types of Inventory
SECTION 3 ‐ Establishing an Inventory Plan
SECTION 4 ‐ Automating the Inventory Process
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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SECTION 1
Overview: Fixed Asset Inventory
Management

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What is a fixed asset?
Why do some people call
them capital assets?
A fixed asset is a tangible asset, it is not
consumed or sold during the course of
business. Fixed assets include tools,
machinery, equipment, vehicles, and office
furniture as well as technology assets like
computers, printers, projectors, etc.
Capital assets and fixed assets are two terms that are often used interchangeably. However, one
point of differentiation is that a capital asset often refers to a fixed asset that can produce new
property for a company.
On another note, a “capitalized” fixed asset is an asset that meets a certain “capitalization
threshold” (more on that later).
Fixed Asset Inventory Management: An Overview

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What is a capitalization threshold?
A capitalization threshold is the minimum cost at which an asset must be reflected in your
organizations accounting records and financial statements. Note: many companies also require
an asset to have a useful life of at least one year. Your capitalization threshold can be
determined by government regulation (e.g. GASB 34, OMB A‐133) or by an internal standard.
Do I only have to worry about
inventorying items above the
threshold?
This is up to you and should be clearly outlined
in your inventory policies and procedures. We
wouldn’t recommend inventorying every pair
of scissors in your office but we would
recommend you consider high theft items or
items that might have value outside of their
purchase cost (e.g. tablet computers containing
sensitive information).

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Like we said, for many public entities, conducting an annual inventory isn’t an option but rather a
requirement. However, believe us, the benefits of having comprehensive asset / inventory
management practices in place go far beyond government compliance. Consider the following:
What are the benefits of having comprehensive asset /
inventory management practices in place?
• You can save $: by knowing what assets you have and where they are, your organization
has the potential to realize cost savings but not having to purchase a new projector
when you already have one tucked in the back of a closet.
• You can save time: next time someone is looking for the projector, your asset records
will indicate where it can be found. Consider the case of the State of Louisiana during
Hurricane Katrina. By referring to asset records, the State was able to respond more
quickly with the equipment needed in the aftermath of the event.
• You’ve got authority: having written policies and procedures will not only make it easier
for you to carry out your inventory plan but will give you authority and a leg to stand on
if you or your team are confronted with questions before, during, or after an inventory.

SECTION 2
Types of Inventory

Types of Inventory
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Wall‐to‐Wall Inventory
A wall‐to‐wall inventory is an inventory of all
items in a given location. It is a very systematic
approach that essentially involves having a
“blueprint” of the facility and methodically
going through the building from one room to
the next. While somewhat time consuming, a
wall‐to‐wall inventory can be more accurate
than other methods.
Note: regardless of which type of inventory you choose to conduct or if you apply a
combination of multiple types of inventory, always make sure it is in compliance with your
auditor’s needs.

Types of Inventory
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Inventory by Exception
Unlike a wall‐to‐wall inventory, an inventory
by exception counts items that have been
“touched” recently as already inventoried.
When implementing this type of inventory, it
is extremely important to define what
constitutes a touch. Is it maintenance or
calibration? Does an asset transfer count?
One example where this type of inventory
might be useful is if you are looking to
inventory a subset of assets that were purchased
as part of a particular grant. You could exclude
assets that have been “touched” and simply go
out in the field to identify the assets that are still
“missing” at that point.

Types of Inventory
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Inventory by Random Sample
An inventory by random sample is simply an
inventory of a small subset of assets. This subset is
identified by a statistically valid and random sample
meaning it is representative of all of the items in your
inventory. Upon completion of this type of inventory,
you can conclude that if you found 95% of the items
in your random sample, you would likely find about
95% of the items in your entire inventory. For this to
be true, however, the sample must be statistically
valid and random.
One example where this type of inventory might be
useful is during a self‐audit process.
All Assets
Sample

SECTION 3
Establishing an Inventory Plan

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We don’t have a plan in place,
where do I begin?
Abraham Lincoln once said, “If I had nine hours to chop
down a tree, I’d spend the first six sharpening my axe.”
Putting effort in up front can save you time in the long run.
We recommend every company/organization establish an
inventory plan. This includes written policies and
procedures that can help guide you through the inventory
process and communicate with other employees or
auditors.
Getting the beginning stages of an inventory plan together may be as simple as stepping back
and asking yourself some standard questions – who? what? when? where? why? and how?
And don’t forget, imitation is the sincerest form of flattery. Don’t be afraid to reach out to
others in your field for advice or to take a look at their plan.

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Some Questions to Help You Get Started
Who? – Who is going to conduct the inventory? An individual? A team of people? A vendor?
Does this differ by type of asset, building, grant/fund or capitalization threshold? To maintain
the integrity of the process, we recommend that the person who conducts the inventory is not
the property custodian.
What? – What are you inventorying? Assets above a certain
capitalization threshold? Belonging to a certain grant? High
theft items? Assets with secure information? Regardless, it is
probably important to identify both new and missing assets.
When? – When is the inventory taking place? What is the time frame for completing the
inventory? Are there milestones, phases, or check points? Do I need to conduct an inventory
every year? Every two years? How does reconciliation fit into the time frame?

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Where? – Where is the inventory going to take place? Are
any of the locations highly secure? Clean rooms?
Dangerous?
Why? – Why are we conducting inventory? For an external
audit? For a self‐audit? For grant compliance? For
property control?
How? – Which inventory method will be used to conduct
the inventory? Will multiple methods be used? Are we
planning to automate the inventory and reconciliation
process?
Some Questions to Help You Get Started

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In Pre‐Inventory Planning, Communication is the key!
Don’t forget to include communications as part of your inventory plan. Maintain a record of
who your main contact is at each facility. Plan to notify them in advance of when the
inventory is going to be taking place. Be sure to explain what your goals are, why they are
important and how they can help. This simple action can help your inventory process run
more smoothly.

SECTION 4
Automating the Inventory Process

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Regardless of which type of inventory you implement, technology can help automate and
streamline the process.
Scanners & Tablets:
Scanners and tablets are both effective ways to automate
inventory. Using one or the other can increase accuracy and
accountability and when synced with a database, can
provide real‐time results.
Barcodes & RFID:
During the inventory process, scanners or tablets can be
used to read both barcodes & RFID tags. Most people are
familiar with how a barcode tag works however, there are
often several misconceptions associated with RFID. The truth
is it’s often a marriage of these two solutions that will provide
the best results.

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Scanners & Tablets
When making decisions about scanners and tablets, there are several points we suggest
you consider. Be sure to consider your answers to these questions before talking to a
vendor and making your final purchase.
(1) Does the device need to work offline?
(2) Will there be sufficient lighting in all areas?
(3) How much battery life will I need?
(4) What is the read range for the device?
(5) What accessories are available? (e.g. cases, Bluetooth scanners, etc.)
(6) Does the device need to scan barcodes, RFID or both?

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Barcodes & RFID
Use Both for Exceptional Results
You may already know, that implementing a complete RFID solution can be very
costly…even more costly if you are talking about active RFID. We recommend using both
RFID and barcode tagging for a cost effective and efficient way of conducting inventory.
Use RFID tags on:
‐ Difficult to reach assets
‐ Difficult to reach asset tags (hidden, high)
‐ Assets that should not be handled
‐ Assets that are highly mobile
Use Barcode tags on most other types of fixed assets.

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Some Benefits of Automating the Inventory Process
Save Time
and $$
Increase
Accuracy
Improve
Accountability
Simplify
Reconciliation

AssetWorks Can Help
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Maintaining proper stewardship of assets is no easy task. If it was, we wouldn’t have a
successful business. For decades, we’ve been helping organizations large and small
implement strategies and technology to streamline the fixed asset inventory process.
If you have questions about maintaining proper stewardship of assets as well as
preparing for and automating the inventory process, one of our experts would be
happy to help. To get the conversation started, simply contact AssetWorks today at
1‐877‐809‐0600 or info@assetworks.com.

AssetWorks Fixed Asset Inventory Management Quick Guide

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AssetWorks Fixed Asset Inventory Management Quick Guide