Introduction
A fixed asset audit ensures your physical assets exist, are in the right place, and correctly valued. In simple terms, it’s a reality check for your asset register. You’re making sure what’s on paper matches what’s on the ground.
Regular audits are essential for accurate reporting and tighter internal control. However, many companies fall short. As shared in our practical guide to fixed asset verification, asset records often have serious gaps.
Studies reveal over 80% of organizations have incomplete registers. Shockingly, one in three assets could be “ghost assets.” These don’t exist physically but still appear on the books.
Consequently, this inflates asset values and skews depreciation calculations. It also introduces serious compliance risks.
Following a structured approach makes fixed asset audits far more efficient and accurate. In fact, annual verification of fixed assets is considered a best practice (and is often mandated by accounting standards) to ensure your financial statements remain accurate.
Overall, this 7-step Fixed Asset Audit checklist helps auditors and finance teams verify assets confidently. Furthermore, it guides you through planning, tagging, and physical verification.
Additionally, it covers reconciliation and taking corrective actions to ensure asset records stay accurate.
Download Asset Register Template
Download Fixed Asset Register template with all relevant fields created out of our 2 decades of experience.
Download Asset Register Template
Download Fixed Asset Register template with all relevant fields created out of our 2 decades of experience.
Quick 7-Step Asset Audit Checklist (Overview):
Step 1: Plan the Audit Scope and Objectives
Clearly define what will be audited and who will do it. Set the scope (which assets, locations, departments) and objectives, and assign a qualified team with specific roles. Then schedule the audit to minimize disruption (notify all relevant departments so assets are accessible) and gather any necessary tools or data in advance (updated asset list, barcode scanners or tags, etc.) to ensure the count goes smoothly.
Step 2: Update and Reconcile the Asset Register
Make sure your fixed asset register is up-to-date before the count. Review and correct any missing information or errors, and reconcile the register with your general ledger to catch and resolve discrepancies early. Gather all relevant asset documents (purchase invoices, titles, disposal records, etc.) and confirm that any issues noted in the last audit (like unrecorded disposals or missing tags) have been addressed.
Learn more about Asset Reconciliation – Key to Successful Asset Verification>>
Step 3: Tag and Identify All Assets
Tag each asset with a unique ID like a barcode, QR code, or RFID tag. Ensure every tag correctly links to the asset record in your system. Replace damaged or missing tags before the audit begins.During the audit, use a mobile app or scanner to mark assets quickly and accurately. For untaggable items, rely on serial numbers, labels, or photos to ensure they’re not missed.
Step 4: Conduct Physical Verification (Asset Sighting)
Go through each location and verify every asset on your list, scanning tags or marking them off as you go. If an asset is missing or an unexpected item is found, note it as a discrepancy. For assets in remote or restricted areas that you can’t visit, have someone on-site send a photo or otherwise confirm their presence.
Step 5: Reconcile Findings with Records
After the physical count, then reconcile results with your asset register. Next, list assets found, missing, or newly discovered. Finally, categorize discrepancies as missing, unrecorded, or data errors based on their nature. Then, calculate the number and value of affected assets. Document all issues clearly in a report or spreadsheet for follow-up.
Step 6: Investigate and Resolve Discrepancies
For each discrepancy, take prompt corrective action to fix the issue. Investigate missing assets to see if they were moved or disposed of, and update records accordingly. Add newly found assets to the register after tracing their origin. Finally, correct any data errors and improve internal processes to prevent repeat issues, such as timely recording of disposals and purchases.
Step 7: Report Results and Improve Controls
Conclude the Fixed Asset Audit by summarizing key findings and corrective actions. Share a brief report with management covering the audit scope, results, and resolved discrepancies.Additionally, suggest improvements like enhanced tagging, regular mini-audits, or tighter disposal rules. Ensure management approves the changes and assigns clear responsibilities for follow-up.
Finally, consider using an asset management tool like AssetCues to help keep your asset records accurate and make the next audit even easier.
Perform Fast and Accurate Physical Asset Verification - Every Time
AssetCues has helped transform asset verification and reconciliation processes for many Fortune 500 Companies
Perform Fast and Accurate Physical Asset Verification - Every Time
AssetCues has helped transform asset verification and reconciliation processes for many Fortune 500 Companies.
Conclusion
By following this 7-step checklist, you’ll keep asset records accurate and financial reports dependable. Regular audits, smart tagging, and prompt reconciliation help eliminate ghost assets and surprises. To simplify your Fixed Asset Audit, apply these steps. Additionally, consider using a tool like AssetCues. With the right tech, you’ll save time, reduce errors, and stay always ready for audits.
FAQ (Frequently Asked Questions)
What are the most common problems found during a fixed asset audit?
Missing assets (on the books but not found) and unrecorded assets (found but not listed) are the most common problems. Auditors also find data errors (like incorrect details or assets not removed after disposal), and these issues can misstate asset values on financial reports if not corrected.
How can technology help improve fixed asset audits?
Technology can make asset audits much faster and more accurate. For example, using a mobile app to scan asset tags greatly speeds up the count and reduces errors. Audit software can instantly flag missing items and generate reconciliation reports, giving you real-time accuracy with far less effort.
Why is accurate fixed asset auditing important for financial reporting?
It ensures your financial statements reflect actual asset conditions and values. Removing ghost assets prevents overstated balance sheets and incorrect depreciation. Additionally, it builds auditor confidence by proving your assets exist and are valued correctly. This protects your business from misstatements, penalties, and compliance risks.
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