Aside from human capital, fixed assets are the second largest investment in any school district. This makes Fixed Asset auditing and tracking one of the most vital aspects of your regular activities. While fixed asset audits are required once a year, most are unfamiliar with the benefits of taking control of your fixed assets on a regular basis. The following sections will be a quick crash course on Fixed Asset auditing and the benefits for your district!
What is a Fixed Asset Audit?
A fixed asset audit is the procedure of analyzing your fixed assets (land, buildings, equipment, etc.) and checking if they are accurately recorded and valued. It is usually performed annually and generally required by State or Federal regulations. When performing a fixed assets audit, you begin by performing a physical inventory, this can be done all at once (most efficient and effective) or in different segments throughout a school year (less accurate). Once the physical inventory is complete you take your results and reconcile them with your master file from before the audit. At this point you get a realtime snapshot of missing assets, moved assets, broken assets, and total value of your fixed assets. This information is not only useful for internal purposes but often times required by the state to help track how funding is being spent.
Why Should You Perform a Fixed Asset Audit?
Every year, schools spend billions of dollars on assets like equipment, technology and real estate. When you purchase these assets, you need to list them in your books, but you also need to track and account for them accurately. You need to know what they cost, what their current value is and where they are being utilized within the district. If you don’t account for your assets correctly, then you may have to pay fines or lose out on future funding for the school district.
How to Conduct a Fixed Asset Audit?
The first step in auditing your fixed assets is to determine what you’re going to audit. You could potentially audit everything, but that would take a very long time and be a poor use of time. Instead, we recommend focusing your resources on auditing the essential items. This can easily be determined by choosing to audit fixed assets that are above a certain cost threshold i.e. $1,000-$5,000 per item and those assets that, when added together, make up a large percentage of your spend, i.e. student laptops.
The next step is to check the accuracy of your records. You probably have records of your fixed asset master file stored in a database. However, where will you store the current inventory you just took? You could keep your inventory on paper or a simple excel file and manually cross-reference your database for errors but this could potentially be impossible to complete accurately. A better, more recently available option, would be to use a fixed asset/inventory software that is able to directly communicate with your accounting software to audit, reconcile and update your Fixed Asset masterfile for quick accurate audit results.
Tracking Assets Through Their Lifecycle
Often it can take weeks or even months to locate a piece of equipment in your school district. Fixed asset tracking software keeps track of new assets as they are being added to your district. When you purchase a new printer, copier, or other piece of large equipment, your fixed asset tracking system will record the purchase immediately. This allows you to keep track of all current assets and their locations at all times.
When it’s time for a computer to be replaced, you can immediately begin looking for its replacement. If the old computer is still in good shape, this allows you to sell the old computer or donate it to another school district that could use it. You can then use the proceeds from selling or donating the old computer to help pay for the new one. This is an excellent way to save money on computers! It also gives you control over when and where computers are replaced in your district, rather than waiting for them to break down before replacing them.
Your fixed assets are tracked throughout their lifecycle until they are fully depreciated and disposed of properly by following government regulations
The government has strict rules about how long assets must be maintained after they have been fully depreciated (declared as “worn out”). If these rules aren’t followed properly, schools face huge fines and penalties that could potentially shut down entire programs!
Conclusion
The fixed assets audit is an important part of your accounting procedure. If you want to make sure that your District’s assets are properly accounted for and that you avoid paying unnecessary fines, then you need to conduct a fixed asset audit.
With the right tools and procedures, you can complete a fixed assets audit quickly and efficiently!
