Scared of Asset Management and Ghost Assets in your Asset Register?
What are ghost and zombie assets?
Ghost assets are assets that are listed in your schools fixed asset register but are either missing or unusable. This usually happens when a piece of propertyhas been lost, stolen, broken, damaged, replaced or soldbut this information is never captured or shared, leaving Finance with incorrect asset data. Conversely, a zombie asset is a fixed asset that exists on school premises, but has not been recorded in the fixed asset register.
Why do they matter?
Outside of staff wages, fixed assets are the most important element of the school balance sheet. If a significant percentage of assets do not actually exist,school insurance premiums may be inflated unnecessarily. Additionally,capital budgeting and financial reporting will be based on incorrect information. An asset that only exists on paper is not much help when it is needed by staff. Likewise, an asset that does exist, but isn’t traceable is not only unavailable for use but also cannot be maintained or insured properly and will lead to additional expense if it has to be purchased again.
How big a problem is it?
A fixed asset is a long-term piece of property or equipment, so you’d be surprised how many aren’t physically accounted for or don’t appear in the accounts ledger. However, it is reported that 12 to 25% of the assets in a fixed asset ledger don’t exist.
It is estimated that as many as 65% of fixed asset records are incomplete, inaccurate, or altogether missing while 10 to 30 percent of fixed assets are no longer owned.
Michael N. Day and Stephen Talbot,
“Data Validation the Best Practice for Data Quality in Fixed Asset Management,” (White Paper) Asset ManagementResources
How to prevent them?
One of the most common reasons for ghost assets is a disconnect between different school departments. Finance, Facilities and IT may all be keeping their own asset lists and changes to one are not always reflected in the others. An integrated asset management platform can help to prevent this disconnect by establishing a centralised asset database that is easy to update andaccessible to all areas for one centralised view.
Another reason is the challenges of a manual asset inventory process. Manual auditing is time-consuming and error-prone, while asset management software makes identifying, finding and updating the location of all assets electronically so much simpler. Barcode or QR code tagging can dramatically increase tracking accuracy and reduce the amount of time required performing annual audits. A complete inventory of all assets and equipment is common at the start of a school asset management implementation, to give you an accurate baseline to work from going forward.