By Esv. Simeon E. Anokwuru
The global standard for asset management provides the framework for Institutions to systematically manage their assets to maximize value throughout their lifecycle.
Both 150 55000 and 55001 : 2014 standards recognize asset management in an organization as a process of planning, coordinating, controlling, executing, monitoring and improving activities that are associated with managing assets. It is not just a computerized information system, although this may form part of an organizations asset management system. It goes further to mandate top management to demonstrate leadership and commitment by ensuring that the assets management policy is established and is compatible with the organization’s overall business objectives/goals.
The scope is not restricted to specific industries or asset types, though it is often applied for physical assets, and must conform with the Asset Management Policy of the organization. A standard policy should specify on how assets are to be acquired, deployed, operated (used), maintained and eventually retired and / or disposed.
Some specific requirements regarding the content of the Asset management policy will usually include:
- Aligning with the purpose of the organization,
- Provide a framework for setting asset management objectives,
- Commitment to continual improvement of the Asset Management system,
- Commitment to satisfying applicable (mandatory and legal) requirements,
- Policy must be documented, available and communicated,
- Policy to be reviewed on a regular basis and updated if required,
- Principles/approaches by which the organization intends to manage its assets,
- Asset management policy should be a short statement and contained within the strategic Asset management plan.
- Commitment to measuring and reporting asset management performance as well as commitment to achieving a long-term, sustainable outcomes.
In adopting a workable system, top management needs to demonstrate their commitment to the effective management of assets within their organization.
The Assets management policy of an organization is therefore as important as safety and environmental policies. It must be developed by Top Management Team or an expert/consultant called in to assist the top management.
Once the asset Management policy is in place, it becomes absolutely important that it is communicated to the rest of the organization and it forms the basis on which Asset Management decision making is founded.
Building a Fixed – Asset Register
A proper and reliable fixed asset register derives its relevance from the organization’s Asset Management Policy. When an organization purchases items of value, it is important to determine correct accounting treatment to ensure compliance with that organization’s Asset Management objectives as well as with International and Local Accounting Standards.
When an item/group of items is determined as an asset, the organization will manage, secure, verify and report on that asset over its useful life.
Asset Register therefore is a comprehensive inventory of all organization’s fixed assets, organized according to its Asset framework.
Definition of Fixed Assets
An asset is an item that an organization/entity owns and uses while providing administrative, educational, research services, construction/building concerns etc.
A Fixed Asset is an asset that an organization retains for more than one year. Some common examples include:
- Land and Buildings
- Plant/Machinery
- Vehicles
- Scientific Equipment
- Office Equipment
- Furniture & Fittings
- Property held for investment purposes.
It does not include consumables and stock items.
Asset Register Reports
Asset Register reports provide ready access to accurate information about the current condition and value to correct deficiencies of organization’s assets in a standardized format that is updated on a regular basis using a repeatable process. These reports are strategic-level documents that provide sufficient information about the condition, suitability and financial value to enable managers to make informed decisions about where to spend limited resources and better forecast maintenance needs to improve service delivery.
This information informs decision-making at all levels of planning and management, including whether to buy, lease, keep, refit, upgrade, renovate, reuse or dispose of owned/leased assets.
Asset register reports support:
- Capital planning, reinvestment and budget preparation
- Maintenance planning
- Master plan preparation
- Facility programming and scheduling
- Code compliance
- Portfolio management
- Monetary worth/value
- Financial forecasting and modeling
- Annual reports
- General information requests
Coding Process
One important aspect of Asset documentation for register preparation is referencing/coding. This is a coded system of neatly numbering the assets in a manner that information about them can easily be retrieved. The classification usually follows accounting practices regarding depreciation. The various classes and sub-classes are denoted by letter or number codes. Serialization is based on sub-classes.
Under this arrangement, each item is allocated a reference number. Location is identified as space where many items are installed in one room/hall, e.g. normal office space like Managing Director’s Office, Commissioner’s Office, etc.
In most cases, it is advisable to use both letters and numbers because locations are best described by proper narration. The serialization, therefore, is based on both ‘’location” and “type’’. For routine asset monitoring, spaces are identified by their occupants, for example, Commissioner’s Office as different from Commissioner’s Secretary’s Office.
Required Expertise
Fixed Assets Registers are normally managed by experienced staff that may not possess high professional skills. The initial development must be done by competent professionals who have:
- working knowledge of accounting
- computer skills
- expertise in valuation.
The valuation consultant will issue a valuation certificate for any asset whose standard lifespan has expired or whose initial purchase price may be in doubt.
Such skills are critically important in preparation for inventories and the training of staff that will manage the scheme.
In conclusion, Assets Registers are very practical application of professional estate management skills to everyday problems of pilfering of property and general mismanagement. They provide a check list that is useful for stock taking, preparation of hand-over notes and routine monitoring.