Unlocking Value : The Essential Guide to Asset Management Policy

The asset management policy : entry, allocation and registration of fixed assets.

In business, effective asset management is crucial for protecting and growing a company’s wealth.. These assets may include real estate, financial property, movable property, financial investments and so on. The purpose of this procedure is to describe the policy or procedure to be followed in managing the acquisition, allocation, registration and disposal of fixed assets. It is triggered by the actual acceptance of the asset by the person in charge of acceptance or the company and the person in charge of general resources.

1- Receipt of fixed assets : On receipt of a fixed asset, the acceptance committee checks its characteristics against the specifications on the purchase order. The acceptance committee gives the supplier a copy of the paper or electronic delivery note after it has been signed. The acceptance committee draws up a signed acceptance report in which it mentions the allocation of the asset, including the place, date, time and person to whom the asset will be allocated.

2- Sending the purchase file to the management control manager : the management control manager receives the signed acceptance report, the supplier’s receipt, invoice and delivery note, as well as the details of the assignment, specifying the person, place, date and time of the assignment.

3- Labelling of fixed assets : the general resources manager, in collaboration with the management control manager, labels the fixed assets received according to their allocation by physical inventory number.

4- Updating the fixed asset tracking file : after validation by the management control manager, the general resources manager updates the fixed asset tracking file.

5- Allocation of fixed assets to the departments concerned : the general resources manager hands over the fixed asset to the department concerned, recording the person, date, time and department concerned in a report and drawing up a signed release form. This task is completed by the actual return of the asset by the department concerned.

The asset management policy : fixed asset inventory.

This procedure describes the policy or the steps to be followed in planning and maintaining the physical inventory of the company’s fixed assets. It is initiated once a year by the physical inventory committee appointed by the company’s Managing Director.

1- Appointment of the members of the physical inventory committee : the Managing Director appoints the members of the physical inventory committee and draws up a list of the committee’s members. This decision is then sent to the administrative and financial manager and the management control manager, who draw up a physical inventory note indicating the premises to be inventoried, the inventory instruments (coding, storage) and the inventory schedule.

2- Checking, signing and forwarding the inventory report to the various entities involved in the inventory operation : the General Manager receives the inventory report for checking and signs it. The purpose of forwarding the inventory report is to ensure that all those involved in the fixed asset inventory process have the information they need to complete the physical inventory of fixed assets.

3- Preparing and carrying out the physical inventory : the general resources manager, in collaboration with the management control manager, codifies the non-coded premises and prepares the fixed asset count sheets, which contain the fixed asset’s codification, registration number, designation and condition, not forgetting its allocation. The physical inventory committee then draws up a report on the physical inventory, which summarises :

Fixed assets identified.
Fixed assets to be retired.
Assets to be disposed of.
Fixed assets not found (physically non-existent).
Fixed assets that have been inventoried but do not appear on the count file.

The minutes are then sent to the Management Control Manager, the Finance and Administration Manager and the Managing Director. The Finance and Administration Manager, with the help of the Management Control Manager, draws up a note explaining the discrepancies and identifying the reasons for them. The results are then sent to the Managing Director.

4- Validation and approval of the summary report : the administrative and financial manager, working closely with the management control manager, checks and validates the results of the physical inventory. The results of the physical inventory are approved by the Managing Director; they are then forwarded to the Management Control Manager and the General Resources Manager for management of the fixed asset situation. As part of its mission, the committee in charge must ensure that all the company’s fixed assets have been accounted for, listed and that the information relating to these assets is correct. Any discrepancies must be justified to ensure excellent management of the company’s assets.

The asset management policy : disposal of assets.

1- Drawing up a statement of fixed assets to be disposed of : on the instructions of the General Manager or following the results of the physical inventory, the physical inventory committee draws up a signed summary statement of fixed assets to be disposed of.

2- Appointment of the Asset Disposal Committee : the Managing Director appoints the members of the Asset Disposal Committee. The Managing Director may also request the assistance of members of the Executive Board in selecting the Asset Disposal Committee.

3- Meeting and deliberations of the Asset Disposal Committee : the Asset Disposal Committee meets to decide on the fate of equipment proposed by General Management or by the Physical Inventory Committee. At the end of the meeting, all the members sign the minutes setting out the final list of assets to be disposed of. The minutes are then sent to the Head of Management Control, the Head of Administration and Finance and the Managing Director.

4- Disposal of assets : The Head of Administration and Finance draws up the request for the disposal of assets for signature by the Managing Director.

5- Recording of revenue from the sale of assets : The Administrative and Financial Manager initiates the revenue management procedure with the Invoicing Department and the General Accounting Manager.

6- Updating the fixed asset tracking file : Following the actual sale of fixed assets, the general resources manager and the management control manager update the fixed asset tracking file.

Comments:

The department involved is the one in charge of managing the company’s assets. In general, the participants include: the managing director, the management control manager, the administrative and financial manager, the general resources manager, the relevant department and the receptionist.

It is also important, when drafting your procedures, to specify the following for each of them :

The type of task
The person carrying out the task
The deadline for carrying out the task
The frequency of the task

The implementation of this procedure will take effect as soon as it has been approved by General Management.

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Our articles are written by expert consultants from ED TRUST, Forvis Mazars, EY, Deloitte and Grant Thornton.