|Home > News > Chasing After Fixed Assets That Are Not Fixed|
After Fixed Assets That Are Not Fixed
by James Punderson
Published in Inside Education August 2001
I'm sure we have all read that we should have a room-by-room home inventory (complete with pictures) so, if our houses burn down or we are burglarized, we will be able to replace our possessions using the insurance we pay so much for every year. We have also been told that the inventory should be updated every time we buy something new and when we move something to another location.
|However well intentioned, I have not gotten around to creating my inventory yet, although I do have my financial records, (assuming the computer survives), so I could probably reconstruct an inventory. Unfortunately, the asset inventory in schools is all too frequently in exactly the same condition, which is a problem because asset management in schools is much, much more important than it is in our homes.|
|Properly maintained, asset management helps with planning, budgeting, loss control, efficiency and repair costs. It should enable you to answer questions such as:|
|Why Asset Management?|
we really need another color laser printer? Didn't we just buy three last
year? Where are they?
Should we just buy a new air-conditioning unit instead of repairing the old one that always breaks down?
Should we send our district technician to fix the server in the library, or is it still under warranty?
What happened to the laptop computer in the science lab? How long has it been missing? What good will it do to report it to the police if we don't know the model and serial number?
What are our total annual expenditures on technology? What is the total cost of ownership (TCO) of our system? What kind of return on investment (ROI) are we getting?
|If you want to manage your assets, you need to know specific information about the assets themselves: description, history, location and current status. Without the asset information, the management part is impossible.|
|Why not just use the fixed asset features of your accounting system? Most districts do enter the quantity and purchase price of each item purchased that qualifies as an asset. This keeps the auditors and the school board happy, so what's the problem?|
|Isn't It a Part of Our Accounting Software?|
|Don't get me wrong. Having financial records is an important part of asset management but it is only a part. It is a rare accounting package that combines the ability to store the information you want to keep with a convenient way for all the interested parties in your district to use it. Just think of the expense and the time it will take to make changes to the system to accommodate your needs.|
|One complication is the definition of fixed assets (or capital assets) inherent to your accounting system compared to the assets you want to track. Many states define a fixed asset as being a long-life item that costs more than a certain dollar amount. For instance, if a computer costs less than $5,000, the purchase is treated as an expense similar to the cost of electricity rather than as a capital expenditure as in the purchase of a school bus.|
|Some accounting systems are not equipped to record the same types of information for expenses as for fixed assets. Even more do not have the functionality to track information such as the location and repair records of expenses, even though the system can do so for capital assets. Expensing an asset the same way we expense electricity does not mean we don't have to keep an eye on it, repair it, upgrade it or move it. When disaster strikes the items classified as expenses by your accounting system, you will still want to collect from your insurance company. So, keep in mind that the insurance company may require specific details to process the claim. Another concern is that even a system with plenty of provisions for recording information may be terrible at handling moves, reading bar codes or taking inventory to see whether the assets are still there. Some systems are just too cumbersome to be used without extensive training. Beyond that, the accounting system itself may be located on select computers far from where your employees actually gather the inventory details. As a result, paper and pencils swing into action, requiring someone to enter the data into the accounting computer later, which creates opportunities for missed or incorrect data.|
|For a variety of reasons, financial accounting systems with or without fixed asset modules can fall short on the non-financial aspects of asset management. Without having more information about the assets themselves, there is no way you can effectively manage them.|
|You need a database; you need to record all the necessary starting information; you need to set up processes to make changes to that database to reflect the history and status of the item; you need a way to verify the data already in the system; and you need a way to use the|
|information to answer the analytical and management questions that arise. In short, you need an asset management system with inventory, asset tracking and management features.|
|There are two kinds of inventory to consider. First, you have a consumable inventory, which includes the 5,000 rolls of toilet paper you should track to make sure you reorder before running out. Second, you have an inventory of longer-life assets such as laser printers, which you don't have to reorder all the time. Each inventory type has to be tracked differently.|
|The consumable inventory function requires that you concentrate on how many of each item are still in your central warehouse or building supply closets. You are not interested in serial numbers, but you are interested in quantities that leave or enter the warehouse. It is probably not important to keep track of every last roll of toilet paper (such as the ones currently in use), and it is not that important to know any more details about the rolls except that they exist. You may very well choose to handle this type of inventory item by the case instead of by the roll.|
|Consumable inventory also lends itself to economic order quantities (EOQ). An EOQ calculation helps determine the most cost-effective quantity to order based on volume discounts, order and shipping costs, and lead time. Used with a calculated safety stock quantity, you can save money on your orders.|
|The second category, the longer-life kind of inventory, is almost exactly the opposite. You are much more interested in the computers in use than those sitting in storage. You are quite interested in the details of each individual unit: where it is, its repair history, its warranty terms and what has been added or removed from it over time. You will need serial numbers to tell them apart, so this is where bar codes and bar-code readers can really shine.|
|Your asset management system needs enough flexibility to deal with both types of inventory; otherwise you will end up with either two separate systems or one inadequate system.|
|You need a comprehensive, customizable, continually updateable and convenient system that meets the needs of your school district. Easier said than done? Maybe, maybe not. Let's take a look at those requirements.|
|Comprehensive means your asset management system can capture all the information you are interested in for all your assets. Recording only the purchase price, date and vendor as some fixed asset accounting system modules do is not enough. You want to record warranty information, the person or company responsible for service, which options are installed, the manufacturer's serial number, your bar-coded serial number, its current location and whatever else would be useful to know about each asset. Do you need all that information for every last item? Probably not. But, you do want to keep all desirable information together in one system. Customizable means there is a way to make it comprehensive enough for your purposes without having to track data you do not care to track. If you want to add a place in the system to record the name of the person who installed the item, you should be able to do that. But, if you do not wish to keep track of the date the manufacturer actually manufactured the item, you should not be forced to do so. You need the ability to make some fields optional, some fields mandatory, some fields appear and some fields disappear. In addition, you need several ways to see reports including some the software manufacturers probably have not thought of yet.|
of different ASP applications.
|Continually updateable means having the ability to update the system whenever something happens. You do not just work on the system once a year or pile up hundreds of sticky notes until you get a chance to update the system. If a computer moves from Room 12 to Room 13, the change gets entered into the system right then and there. If the black-and-white laser printer in the library is traded in for a new color printer, that transaction gets recorded immediately. Of course, like any accounting system, there has to be a reconciliation, or a "balancing your checkbook," process to make sure you really have what you think you do and that it is located where you think it is. It is possible that some staff members did not faithfully do all the updates, and it is conceivable that some items have disappeared altogether.|
|On a regular basis, schedule a physical inventory at each location to cross-check what is actually there against what the computer says should be there. Using bar-coded labels with a portable bar-code reader makes the process very fast and quite accurate.|
|Convenient means the system is always available everywhere. Whenever your staff does something with an asset, it can be recorded on the spot. Convenient also means that if you decide later that you need more customization than you originally thought, you do not have to start from scratch. Simply stated, convenient means that people are not aggravated every time they use the asset tracking system.|
|In the past, finding, purchasing, installing and using a comprehensive, customizable, continually updateable and convenient asset management system has been quite difficult. With the coming of the new generation of Web-based applications provided by an application service provider (ASP), the task has become much easier and much less expensive. Using an ASP means all you need is a computer that is connected to the Internet, and the application is instantly and always available everywhere in your district without anyone in your tech group having to install or maintain it. You can find some examples at ASP Island where hundreds of different ASP applications are listed; just visit www.aspisland.com/applications/ and look under the accounting category for the word "asset."|
|Now, if I could just find something like this for my home inventory ...|
M. Punderson IV, M.Ed., is a former teacher, school board president, network
engineer and author. He is the founder of Networks & More! Inc. (www.k12usa.com),
an educational technology and e-rate consulting company providing Internet-based
software services exclusively to schools. He can be reached
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