Mandatory asset accounting
Recording assets in accounting is a legal obligation and is now a matter of course. In accounting software, assets are recorded from the accountant's point of view and are classified as defined by the laws of the respective country and as specified by accounting guidelines for the company. Many assets are not in the accounting view.
The operational view of assets is sometimes different from the accounting view
However, in addition to the accounting view, we see other, operational views and needs of companies in practice. They look at assets in a different way. They need to work with pieces of property and other things quite differently from what the accounting needs are.
- operations needs to issue assets, to hand things over to people and to keep track of where they are or who has them
- operations needs to keep documents for assets
- operations needs to maintain or keep assets in compliance
Let's look at a few examples from practice where there is either a different view of the structure of assets or where we are interested in completely different "assets" than in accounting.
Assets from the perspective of the onboarding and offboarding of an employee
When an employee starts work, there are a number of work tools, work equipment or anything else that we have to hand over to the employee (often in the form of a handover report) and therefore we should keep records of these items and who has them or where they are, but it does not fit into information required for accounting.
- Keys are a typical off balanced sheet item that exists, but the company gives them to employees and therefore should keep records of them. It is not about the value of the key itself, but about the potential damage or security risk that can occur. If keys are lost or misplaced, an even bigger problem can arise, if a company uses a master key system. Such a replacement of door locks on an entire floor is not a cheap affair
- Access cards, tokens and the like. Again, a great similarity with keys. They don't really exist from an accounting point of view, but their recording and handing over to employees is essential information of where, who, and when
- Passwords and accounts in enterprise applications and systems are sorts of information assets that we need to keep track of - whether they are assigned or removed when an employee leaves
- Other work-related equipment - for example, mobile phones, computers, various work equipment, tools and gadgets or leased cars
Operations involving Occupational Health and Safety, OHS
From an occupational health and safety (OHS) perspective, it is often necessary to approach assets in a different way than in accounting. Why and what assets are important to record from an OHS perspective? This is mainly due to the recording of various assets, devices and equipment in workplaces that could be the source or cause of some safety risks or, on the contrary, may be part of certain measures preventing risks for which the OSH technician in the workplace is responsible. The reasons for recording assets from an OHS perspective are therefore twofold:
- recording and inventorying the equipment in the workplace, in other words, what is in the workplace (see inventory of room equipment)
- records and inventories of the equipment of specific employees, in other words who works with what or is responsible for what (see inventory of employee equipment)
Examples of items, equipment and devices from an OSH perspective:
- building elements and workplace equipment (eg; fire safety equipment, protective screens)
- instruments (eg; calibrators, thermometers)
An overview of compliance, maintenance, revisions, calibrations and technical equipment checks
Many assets, equipment, machines, and facilities require technical inspections, calibrations, or revisions. However, in practice, these assets are often broken down differently from how they are shown in the asset accounts. Either they are accounted for as part of another asset (e.g. a chimney/flue for which you need an inspection), or they are structured differently within the asset than required by maintenance and documentation (e.g. a diagnostic instrument consists of several parts that have completely different maintenance or inspection interval requirements). Thus you have one instrument in the asset that in practice needs to be maintained as five different instruments.
Examples of items, equipment and instruments from a maintenance perspective:
- protective work equipment
- building and property elements such as chimneys, flues, guardrails
- groups of instruments recorded in the accounts as a single item (monitor, keyboard, diagnostic part, printer)
The maintenance overview has another aspect and that is the maintaining of accompanying and operational documentation for the assets recorded (e.g. declarations of conformity, commissioning, operating and maintenance manuals) and operational documentation (e.g. inspection reports, records of inspections, calibrations, etc.).
Leased assets
Items that a company has leased under an operating lease or for which it pays a subscription fee are often not subject to accounting, but the same applies as in the previous cases. In practice, we need to know who has the item
Examples of items on lease from practice:
- leased cars
- computers, mobile phones and other equipment on lease
- software or cloud services paid for by subscription
Old depreciated assets
Sometimes it also happens in business that a company has some older equipment, Typically, older furniture or pieces of equipment that for some reason are no longer in the accounting records but the company needs to keep records of them for various reasons.
Keeping assets in addition to those account records therefore makes sense
It follows from the above that keeping records of assets alongside accounting makes sense, and that in practice there are a number of situations where the processes require it, but it does not mean that records of assets are kept twice and separately in two places. Processes, particularly around employee onboarding and offboarding and OHS, make such a need clear and are essential to the day-to-day processes in companies.