Inventories of Tangible Capital Assets

Back in 2005 there was an American TV series called the Sleeper Cell, glamorized during the war on terror post 9/11. The series was nominated for an Emmy award for Outstanding Miniseries and glamorized the infiltration of an undercover FBI agent into a terrorist sleeper cell that is planning an attack on Los Angeles. These group of operatives or spies are living in secret, waiting for instructions to carry out their mission.

In many ways, tracking of tangible capital assets for governments can be the great unknown and sleeper cells of government entities. Lurking in the background, slowly waiting for an audit to expose its weaknesses or exposure to fraud.

 Local government asset lists can be one of the hardest things to maintain, especially given the level and threshold of what is considered a capital asset. The lower the value, the harder to track. These are important to track to protect the danger or loss or misuse by employees or others that may understand the system.

 Imagine a library system that was open and didn’t track its books, I doubt there would be many books available for system users. Especially the latest and greatest, which always have a waitlist at your local library.

 So why should they be tracked, here’s several reasons . . .

 a) These must be tracked to ensure accountability to ensure proper management and stewardship of those valuable resources.

b) Without a proper tracking system, there cannot be financial integrity to ensure reliable financial reporting and accurate financial statements.

c) Tracking is also necessary to ensure compliance with any grant regulations, either from state or federal, to prevent loss of potential future grant dollars.

d) The number one risk of fraud always comes from opportunity. Reducing the risk of opportunity through risk management procedures will help to maintain those assets.

e) Life-cycle purchasing cannot be done without tracking and proper planning. Planning for replacement cycles of various tangible assets can be properly done through scheduling life cycle replacement.

 GFOA recommends that every state and local government periodically inventory its tangible capital assets to ensure that all assets are accounted for no less than once every five years.

 Unfortunately, many local governments, lack the financial resources or staffing resources to periodically inventory all its tangible capital assets. Doing so requires significant field time. So, what can we do to assist with this process with a lack of financial resources?

 As with so many governments, resources can be severely constrained and adding additional staff to handle ongoing inventories can be difficult to achieve. In adding this in addition to current duties can be tough on staff. A few things we can do to help:

 1) Leverage technology: Technology can be an amazing friend, especially when deployed and adequately updated to achieve desired results. Technologies like RFID cand ensure price tracking, reducing errors and enhancing asset tracking accuracy. There are also many asset software’s that could be deployed to assist with not only tracking, but also life cycle replacement.

2) Plan over a multi-year period: GFOA recommends that once every five years assets are inventoried. Split up the assets for review over a five-year location and divvy it up to make it easier to review.

3) Department Staff: Encourage department staff to help with the physical review and then do spot physical audit checks to ensure accuracy.

In a world where risks can lie hidden, it's essential to stay vigilant. Proper planning, smart use of technology, and teamwork will ensure that every asset—like a book in a library—remains accounted for.