When conducting a comprehensive study of the state of affairs at a particular company, it is necessary to completely cover all stages of the production process, as well as carefully analyze the assets and liabilities of the enterprise. Since fixed assets represent the largest part of assets, their analysis should be made especially carefully. In this article we will explain how to properly analyze the fixed assets of the company.
First of all, let’s try to understand why such an analysis is necessary at all? Analysis of fixed assets allows you to understand whether the company currently has the ability to successfully continue its activities without attracting additional investments, because fixed assets are the most capital-intensive assets. In addition, the most financial frauds are carried out with fixed assets, so regular thorough analysis is simply necessary.
Consider the main aspects of the analysis of the OS:
- Analysis of the acquisition and assessment of fixed assets allows you to systematize information about when fixed assets were bought, and whether their initial cost was correctly assessed in accordance with legislation and accounting standards.
- Analysis of the technical condition of fixed assets allows us to assess the state of the OS now and to predict the need for their replacement in the future. In addition, the analysis of the state of the OS will also allow you to assess the correctness of depreciation, allowing you to identify fraud with the amounts of deductions.
- An analysis of the movement of fixed assets will show how fixed assets were transferred during the period of their use between different departments of the enterprise, whether the transfer of ownership of the OS from one structural unit of the company to another was documented, and so on. The movement of fixed assets can also include their sale, however, taking into account the logical chain of operations with fixed assets, we consider it appropriate to attribute the sale of fixed assets to the next paragraph.
- Analysis of OS reproduction is another source of identifying many violations and frauds. This analysis allows you to evaluate the use of funds and depreciation fund, as well as the reliability of documentary data on the sale of fixed assets at residual value. The analysis of reproduction makes it possible to understand how efficiently an enterprise restores its main resource, without which no production activity is possible.
Since the turnover period of the fixed assets is quite large, and can be from two to ten (or even more) years, it makes no sense to analyze fixed assets annually. It is advisable to carry out this analysis approximately every five to seven years - this helps to keep the state of the OS under control, monitor the need for their replacement due to technical condition and wear, and also minimize fraud with OS objects.
In order to analyze fixed assets, both company employees (accountants, company executives) and third parties, for example, representatives of audit firms, can be involved. An OS audit will cost significantly more than an in-house audit, but it will give confidence that it was carried out at a high level by highly qualified specialists, and there is no reason to fear that some facts of violations or fraud were not noticed.
Naturally, the analysis of fixed assets should not be “verification for the sake of verification” - based on its results, measures should be taken regarding optimization of the operating system, their updating, changes in the accounting system or other management decisions. Making such decisions is, of course, the goal of analyzing the OS.