The importance of properly managing fixed assets is often overlooked by businesses. Because of the time and manpower required to inventory and track fixed assets, this part of the business is often ignored. Yet assets like land, buildings, transportation, and manufacturing equipment represent the largest investments most companies make. While sound fixed asset management can lead to a substantial tax savings in depreciation deductions, poor fixed asset practices can threaten the accuracy of financial reports, causing re-reporting and negatively impacting the bottom line. Establishing the highest standards of depreciation accuracy and best practices in fixed asset management will pay off in savings and efficiency no matter what type of business you are running.
While spreadsheets are used by companies for a wide range of tasks, a majority of companies continue to use spreadsheets for financial tracking and reporting. However, in the post-Sarbanes-Oxley legislation world, it is more important than ever for companies to keep tighter track of their financial data, including their fixed assets.
The Shortcomings of Using Spreadsheets to Manage Your Fixed Assets
The negative aspects of spreadsheets, when it comes to tracking and depreciating fixed assets, are substantial. They include the manual creation of formulas, lack of audit trails, security concerns, and the potential for fraud, to name a few. Take a look at some of the major ways spreadsheets fall short in managing a company’s fixed assets:
- No Audit Trails
With spreadsheets, the only documentation of changes that can be uncovered is based on the last person to access the spreadsheet and the date it was last modified. Any changes previous to that would require a manual logging of what changes were made. This leaves spreadsheets vulnerable to both accidental and intentional changes that can materially affect the integrity of data. If a spreadsheet has been consistently used in one way for years and someone else makes a change to suit another need than what was originally intended, the final results could be changed to suit their purpose while feeding incorrect information to other sources.With the selection of proper fixed asset inventory and accounting software, an automatic audit trail function exists, detailing when changes were made to the information concerning an asset and what information was changed. This trail exists for the life of the asset, even after an asset is disposed of.
- Inconsistent Data Entry
Often times, people use different terminology for identical items. This can create confusion when trying to group items for performing calculations or performing inventory checks. While one person may enter an item and label it as “Office Chair” someone else may enter “Chair” for an item that is identical. Performing inventories and calculations are greatly facilitated if like items are entered with the same description.Fixed asset software allows for the creation of “smart lists,” which ensures consistent data entry and expedites the accurate entry of assets.
- Reporting Deficiencies
While spreadsheets allow for the creation of reports, they often require the programmer to create these reports from scratch. It can sometimes be difficult to tie different information about an asset for display on the same report. Many times spreadsheet users will copy and paste values in a separate worksheet to assist in the creation of a report. If the data used in the report is not tied directly to the original cell containing the data, changes to the original data are not updated and the report is incorrect.Robust fixed asset accounting systems come with common reports already built, and can easily be changed to show the data necessary in the report without changing the data or its association with a fixed asset.
- Changing a Worksheet Can be Difficult
Once a worksheet has been developed, it can be very difficult to add new information. Improperly inserting columns or rows can affect the calculations or source data. Many times spreadsheet users find it “easier” to build a brand new spreadsheet from scratch.However, with software designed specifically for the task intended, it is easy to add information without damaging the integrity of the information associated with a particular asset.
While the spreadsheet is an integral part of business operations, it is clearly evident that it cannot perform all the tasks businesses face. And while importance on tracking and monitoring fixed assets is often overlooked, the return on investment that can be attained by maintaining a current inventory and properly accounting for fixed assets in a “best of breed” solution can be substantial. By implementing a dedicated asset inventory and asset accounting solution, companies can achieve many benefits, such as financial savings, improved accuracy, reduced working hours, reporting compliance, and theft reduction.
The Sage Fixed Assets – Tracking module will help you track your assets accurately so you can develop and maintain tighter internal controls and create more accurate reports. Don’t rely on spreadsheets for tracking your company’s important assets; invest in Sage Fixed Assets today. Learn more about the Sage Fixed Assets – Tracking module, and contact us today to discover how you can start protecting your company’s most valuable assets.