by Jay Shalakho, Valuation Consultant
If you’re part of a government entity such as a school district, which must meet both Generally Accepted Accounting Principles (GAAP) and GASB compliance, completing a fixed asset inventory is crucial. Your organization is accountable to State Auditors (and taxpayers!), so having a transparent and accurate record of your fixed assets is basically non-negotiable. A fixed asset inventory becomes the best way to achieve it.
While the thought of going through the inventory process can be daunting, the benefits are many, including improved fiscal management, effective compliance, and better asset tracking.
Let’s talk a little about what these procedures look like, and how to best approach your inventory preparation and ongoing practice.
Planning Your Inventory Project
- Clearly define the scope of the inventory project. At Centurisk, we work with clients to define the types of assets to be included (for example, buildings, equipment, vehicles) and the locations to be covered (such as: all schools and administrative offices). Before inventory begins, make sure you outline the project’s objectives, like verifying the existence, condition, and location of assets. This allows you to quantify your results at the project’s end.
- Establish a timeline for conducting the inventory, considering factors such as school holidays, staff availability, testing, and other scheduling constraints. (Your inventory appraisal firm should work with you to determine what’s feasible from a scheduling standpoint.) Together, you should set clear deadlines for completing each phase of the process.
- Help your inventory firm prepare for the fieldwork. Start by supplying your inventory firm with the most current data from a recent audit. At Centurisk, sometimes the data we receive contains older equipment or “ghost assets” (items on our customers’ reports that no longer exist). We can help eliminate those, reducing your organization’s taxes and/or insurance costs. Nobody wants to pay premiums for assets they don’t actually have, right?
- Work with your inventory provider to establish procedures for resolving discrepancies, updating asset records, and implementing Corrective Actions as needed. Determining how to approach these items before the inventory begins makes the actual inventory a smoother process.
Prepping for the Site Visit
- Help make the inventory process go more smoothly by clearing appropriate staff members’ schedules to assist your asset appraisal specialists. This could include administrators, department heads, custodial staff, and external auditors. If your appraisal services firm comes across “zombie assets” (existing assets that are found but have never been added to your depreciation schedule), it’s important to have a staff member available to help figure out how to treat those assets.
- Provide access to all buildings and locations where your inventory will be Having keys and floor plans at the ready will help expedite the process.
- Tag and label assets for easy identification, prior to your inventory, if possible. At Centurisk, we can provide instructions on how assets should be tagged and where labels should be placed; consistency is important. Without this crucial step, future audits and re-inventories become more difficult.
Post-Inventory Action Items
- Train staff members on inventory procedures and make sure they understand what their responsibilities are in the asset inventory process. Encourage open communication channels to address any questions or concerns that may arise. And make sure you leverage the most recently-updated inventory database for the training, so everyone is familiar with the freshest data.
- Implement measures for quality assurance and review after your inventory is complete. This may include random spot checks, reconciliations with existing records, and verification by multiple staff members.
- Emphasize the importance of continuous improvement by regularly reviewing the procedures learned from previous inventories. This will become easier with time and help establish a protocol for your fixed asset inventory in future years.
- Don’t hesitate to connect with your inventory services partner for assistance or resources, as needed. At Centurisk, we’re happy to answer questions about the inventory process throughout the year, not just at inventory time. By identifying areas for improvement, you can make future inventory efforts easier and more efficient.
Take Control of Your District’s Asset Inventory
With proper planning, preparation and post-inventory reassessment, you can help ensure a smoother and more successful fixed asset inventory experience, year after year. And if you need assistance with your district’s asset inventory, contact us. We’ll be happy to discuss how we can partner with you to make your inventory process easier and more effective.
About the Author
Jay Shalakho resides in lower Manhattan with his girlfriend Amy and their cat Noodles. He enjoys traveling, riding his motorcycle, live music, seeing friends and family, and getting in a few rounds of golf when he can.