Ghost assets in your fixed asset register lead to financial inaccuracies and inefficient operations. Find out how software can uncover and prevent them.
Despite featuring in nightmares and horror stories for millennia, ghosts tend to be rather harmless. But ghost assets in your organisation’s fixed asset register can wreak havoc on your financial and operational data.
Learn more about these assets, the risks associated with them, and how FMIS’ automated asset tracking software prevents and uncovers them for improved register reliability.
Ghost Assets Explained
Ghost assets are items that have been disposed of, lost, stolen, or are unusable, but are still recorded as active assets in a fixed asset register. Despite no longer being owned by the organisation or no longer existing, these assets still appear on financial records and continue to be depreciated, something which has serious implications for the organisation.
Assets that have been transferred, stolen tools or IT equipment, vehicles that were sold, and machinery that has been scrapped without updating the register are a few examples of ghost assets.
Offering easy tracking, fast audits, and automated updates, FMIS’ asset tracking software is a powerful solution to ghost asset fixed asset register issues.
How Ghost Assets Happen
Ghost assets can happen for a number of reasons, including:
- Unrecorded Asset Disposals: This often is a result of operations teams not notifying finance teams to remove assets from the register when they are donated, replaced, scrapped, or sold.
- Reliance on Manual Tracking and Recordkeeping: The administrative burden and potential for human error associated with manual asset tracking and recordkeeping, as well as disconnected systems, contribute to inaccurate data and ghost assets.
- Lost or Stolen Assets: Equipment, laptops, tools, and other portable assets are easy to steal, and while theft may be reported to management, management may not convey the message to the finance team, with the result that these stolen assets remain on the register.
- Asset Transfers Not Updated: Some ghost assets occur when items are moved from one department or location to another without updating the register.
- Data Capturing Errors: Asset data capturing/entry errors can occur during manual input or system migration, leading to duplications, other incorrect records, and ghost assets.
FMIS’ asset tracking solutions support reliable, strong asset management processes and offer the lifecycle visibility you need to prevent the poor management and mistakes described above from causing ghost assets in your fixed asset register.
Ghost Assets Distort Financial and Performance Data
The main reason why ghost assets are a problem for organisations in the UK is because they distort financial and performance data in various ways. If they’re in the fixed asset register, they’re going to appear on balance sheets, where they inflate the organisation’s asset value – and this is not the only way in which they contribute to inaccurate financial reporting. They also continue to depreciate, exacerbating financial inaccuracies. As a result, your organisation may have higher insurance premiums and/or tax on assets it no longer owns.
Additionally, ghost assets distort the data your organisation uses for budgeting, asset replacement cycles, and maintenance planning. As a result, your efforts in this regard will be much less effective and result in wasted time, money, and other inefficiencies. Your organisation is also likely to experience slower operations and reduced productivity due to ghost assets, as staff may rely on or waste time looking for assets that no longer exist.
Ghost Asset Audit and Compliance Risks
Ghost assets haunting your fixed asset register also expose your organisation to audit and compliance risks. Among these risks are financial misstatements, non-compliance with accounting standards and government frameworks, and poor internal control findings. Physical audits will undoubtedly reveal discrepancies between your physical assets and the register, which could lead to your organisation being audited.
FMIS’ asset tracking software is the key to creating and maintaining the accurate fixed asset register you need for your organisation to be financially transparent and audit-ready.
How Asset Tracking Software Uncovers and Prevents Ghost Assets
Automated asset tracking software is your organisation’s best defence against ghost assets, uncovering those already on your register and preventing more from appearing. One of the ways FMIS’ software does this is by enabling you to track assets from acquisition to disposal for full lifecycle visibility and accurate records.
With this software, you can use barcoded asset tags to assign a unique identifier to each asset, making it easier to locate and reconcile them with your fixed asset register. In addition, the software’s automated updates reduce the risk of incomplete, inconsistent, or outdated records across different departments and sites.
By simplifying the audit and verification process, asset tracking software supports faster physical inventories and reconciliation between physical items and digital records. Lastly, the software ensures assets are correctly recorded as having been disposed of or retired.
Bust Ghost Assets with Reliable Software
Ghost assets may be a common problem for organisations in the UK, but the good news is that they’re easy to deal with when you have the right tools. Bust them with FMIS’ asset tracking software. Your finance and operations teams will thank you.
