Manual accounting wastes time and brings risks such as inaccurate reporting. Learn how fixed asset accounting software saves time and reduces risk.
Fixed asset accounting is an essential aspect of running a business, but this doesn’t mean organisations don’t struggle with recurring issues related to it. Reliable fixed asset accounting software can help reduce or eliminate these issues.
This is especially true for organisations that are over-reliant on manual processes. The Financial Reporting Council found impairment of assets was the number one issue raised in 12% of cases opened, and that the number of impairment-related restatements had increased. Additionally, 26% of audits required more than limited improvements, and the rate at which the regulator had to raise substantive questions was 47% overall but 61% for non-FTSE-350 companies.
Along with simplifying asset tracking and lifecycle management, FMIS’ fixed asset accounting software helps reduce risk and save time with accurate reporting, depreciation calculations, and improved compliance.
Automated Asset Tracking: Time Savings and Accuracy
Time-consuming and prone to errors, manual asset tracking is the root of many fixed asset accounting headaches, such as asset duplication, misclassification, or loss. FMIS’ software relies on automated tracking to eliminate the need to record purchases, transfers, and disposals on manual spreadsheets and to provide better visibility.
Organisations and their accounting teams can track each asset’s exact location, access information such as purchase dates and depreciation schedules, and detect unauthorised use or movement. As well as reducing the amount of human labour involved in tracking fixed assets and preventing the issues mentioned above, this feature provides accurate data linking financial records and physical assets for audit purposes.
Financial Reporting: Accuracy and Compliance
Inaccurate financial reports and a lack of transparency can result in failed audits and regulatory penalties. By offering accurate and compliant reporting, FMIS’ software reduces the risk of this happening. Beyond this, it saves time by generating extensive summaries and detailed reports suitable for finance and non-finance users, physical audits, and other purposes quickly and without the need for human intervention.
Organisations can restrict the fixed assets included in reports using extensive search criteria and use forecasting reports to determine how much assets will depreciate and to make informed decisions around asset replacement. The software also enables them to compare budget and actual reports, and to automate reports from historical asset costs and other data. With asset changes reflected in reports automatically, it’s easier to maintain accurate, up-to-date records and to ensure compliance with regulatory requirements.
Automated Depreciation Calculations: Saving Time and Money
Manual depreciation calculations come with the risk of calculation errors and applying incorrect depreciation methods to various asset classes. FMIS’ fixed asset accounting solutions eliminate these errors and ensure compliance with GAAP, IFRS, and other accounting standards by automatically applying the correct methods when calculating depreciation.
In addition to saving time through automation, the software can help organisations save money. Inaccurate calculations can lead to organisations paying more tax than necessary, while putting them at risk of penalties. By providing accurate depreciation calculations and allowing organisations to set up and manage multiple books for local, group, and tax purposes, FMIS’ software enables organisations to pay the right amount of tax and avoid restatements and penalties associated with non-compliance.
Accurate Asset Valuations: Reduced Insurance Risks
Inaccurate asset registers and depreciation calculations can lead to businesses either under- or over-paying on insurance, affecting their coverage level. Along with putting organisations at risk of not being able to replace assets that have been damaged, stolen, or destroyed by fire or other causes, this leads to organisations wasting time and money.
Fixed asset accounting software can reduce the risk of this happening by helping businesses maintain the appropriate level of coverage. Organisations can provide insurers with accurate asset valuations and other data, enabling them to determine the appropriate amount of coverage. Additionally, the detailed asset records provided by the software can make insurance claims processes more efficient.
Audit Readiness: Greater Efficiency and Risk Control
Preparing for audits manually is a labour-intensive exercise that comes with the risk of non-compliance due to human error. This could lead to consequences such as restatements, fines, and reputational damage. However, organisations can enhance their efficiency when preparing for audits and reduce risk with fixed asset accounting software.
By tracking all asset changes, the software offers comprehensive and transparent audit trails. Thanks to the accurate asset management data and compliance reports provided by the software, internal and external auditors can carry out audits faster and more efficiently. This leaves businesses with fewer worries about non-compliance and their regulatory standing.
Harness the Power of Fixed Asset Accounting Software
Once the norm for decades, manual fixed asset accounting is not worth the associated risks or the time and effort required to ensure accuracy and compliance.
Reliable fixed asset accounting software from FMIS offers a powerful solution to these issues. The benefits go beyond saving time and money, protecting organisational reputation, and audit readiness. With FMIS, businesses take several steps toward becoming future-proof.