Physical assets are tangible assets and can be seen and touched - think computers, office equipment etc. Finance, accounting and even IT teams need to keep track of these items because they depreciate or lose value due to wear and tear over time. Most companies are still using spreadsheets and manual counting processes to keep track of these items. A problem with this common practice, though, is the appearance of ghost assets (unaccounted for assets.) Here's how you can vanquish ghost assets from Oracle Financials Cloud.
How Do I End Up with Ghost Assets?
A 'ghost asset' is a fixed physical asset in accounting's general ledger that is unaccounted for because it is physically missing. A ghost asset could also be an asset that is no longer usable and has been sent to the "graveyard," aka the trash, and the accounting team was not informed. Ghost assets cause inaccurate financial reports and haunt quarterly and annual balance sheets. Anyone that has been through an auditing process knows that it is a very painful and oftentimes expensive process to correct. According to Gartner, 30% of organizations don’t know what fixed assets they own, where the fixed assets are, and who is using these assets.
Why is visibility into fixed assets such a problem? One reason is that most companies are using spreadsheets to keep track of their physical assets, while research shows that 94% of spreadsheets contain errors. Most errors are caused by human error, which means they are preventable and avoidable. If a company doesn't have a counting process established for their fixed assets, they are also relying on the field to report back on if assets are replaced, no longer usable, lost, stolen or moved.
How Do I Fix Ghost Assets?
Gartner estimates that the average company will have anywhere from 15-30% of ghost assets in their inventory. The challenge is keeping up with the location, quantity, condition and depreciation value of your fixed assets. There are two main steps you can take to eliminate Ghost Assets from your financial data.
Step 1: Identify all of your Fixed Physical Assets and set up a regular counting cadence
If you don't know what assets you have, you can't keep track of them. Start with a physical inventory of all of your physical assets, noting their location, life cycle stage, and departments that are in charge of each asset. Next, you'll want to scheduling a regular counting cadence for each asset. Make sure to communicate to each department the importance of visibility into lost, stolen or damaged assets and the impact it has on your balance sheets.
Step 2: Eliminate manual processes and inaccurate data with automation Automation of manual processes is the fastest way to rid yourself of bad data. Manual processes are prone to error and tracking problems. If you can eliminate manual labor in your counting process, you can significantly reduce wasted time, energy and expenses. The top benefits of implementing automation in your fixed asset audit process include:
Lower administrative costs & faster processes
Improved data accuracy
Ability to plan for future growth
Maintaining regulatory compliance and certifications
Using a Mobile Fixed Assets Solution with Oracle Financials Cloud
If your company is using Oracle Financials Cloud, RF-SMART’s Mobile Fixed Assets can help automate the counting process and eliminate ghost assets from Oracle. You should already have your assets set up as physical assets in Oracle Financials Cloud before getting started. Next, make sure your assets are tagged with asset tags, which are labels with barcodes for easy and accurate reading from a mobile device.
In RF-SMART, managers can assign counts to a worker. Frequency of the counts can depend on the type of asset and how often it needs to be counted. Workers need to be connected to WiFi to download the count to the device, but are able to scan and count assets while being offline if WiFi connectivity is an issue. Once a count is completed, managers can review and approve counts before submitting to Oracle Financials Cloud. Found assets can have their location updated and any assets that are not located can be investigated or written off.
Want to see how RF-SMART can help you eliminate ghost assets?
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