What Is Fixed Asset Management
The acquisition of capital assets should be organized to ensure that authorized acquisition have been made and the record of each acquisition are accurate, complete and recorded in the appropriate period. The Assets Management system will facilitate easy identification of assets.
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Policy
Accurate records are to be maintained of the f cost and accumulated depreciation of the asset.
Books/Records to be maintained
- fixed asset management Register
- Fixed Asset Movement Register
- Schedule of Fixed Asset
Transfer of Fixed Assets
Changes in location of an asset to some other location shall require an approval from the appropriate authority stating the reasons for such transfer. A copy of such approval shall be forwarded to finance department.
Depreciation
- Diminishing Balance Method of depreciation will be followed to allocate the cost of all assets over the year
- No depreciation will be charged on fixed asset management that were purchased during the year.
- Full year’s depreciation will be charged on assets disposed of during the year.
Disposal of fixed asset Management
- Fixed assets can be disposed after having authorization from designated personnel. The reason for disposing must be documented.
- Process of disposing the fixed assets
- The designated personnel must authorise ail disposals. Assets having market value less than Tk. 50,000 may be disposed of directly as per decision of the disposal committee.
- Assets having market value of Tk 50,000 or more shall be sold through bidding process.
- Assets having no market value shall be destroyed.
- If an asset is sold the fixed asset register must be updated to show the date of disposal and the sale proceeds and cross-referenced to the sale documents. A receipt must be given to the purchaser.
- If an asset is scrapped, this must be authorized by the designated personnel, and must be recorded in the fixed asset register as scrap.
Disposal committee
- A three-member disposal committee shall be formed with the authorization to review the disposal issues and oversee the disposal of fixed assets.
- The disposal committee member shall be prohibited from bidding.
- The committee members shall use their best judgment in selecting the assets to be disposed of and determine the present fair market value of the assets.
- After evaluation of the bids/ offers, the disposal committee shall prepare a comparative statement of bids received and submit the same along with recommendation to the authorized person for necessary approval and conclude the sale of assets.
Existence of fixed assets
- Each fixed asset should have a permanent identification number which will be written on the fixed asset permanently. The number should be assigned immediately after acquisition of the asset.
- Account Division will maintain a computerized list containing the following information:
- Fixed asset inventory number;
- Description of asset including make, model and serial number;
- Date of acquisition;
- Voucher number through which the assets were acquired;
- Cost of the item;
- Supplier's name;
- Location of the asset;
- Staff responsible;
- Sale proceeds and date of sales.
- The fixed assets will be physically counted at least once in a year. Within two months before the close of the year, a fixed assets inventory committee will be formed to carry out the physical inventory of all assets.
- The responsibilities of the committee are to:
- verify the fixed assets physically;
- ensure that the records are up to date;
- check the conditions of the assets;
- The committee will prepare a report. The report will focus on:
- The existence of all the assets recorded in the books of accounts;
- Condition of the fixed asset management;
- Unused fixed assets;
- Compliance of the rules and regulations.
- The Authorized Personal staff will take decision based on the observation mentioned in the report of fixed asset inventory committee.
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