Reconciliation

Lockwood offers a comprehensive fixed asset verification & reconciliation service. The service is designed with the intent of; improving the quality of the existing ledger information and improving the process flows that impact asset information as it flows throughout the typical asset life cycle. This requires objective assessment of the ledger contents and the business rules (internal controls) that support internal asset management. Lockwood has successfully refined this service over the past ten (10) years with our many customer engagements throughout the world. Lockwood charges an inclusive fixed fee for this service, which is usually charged as a percentage of the remaining net book value of the full fixed asset ledger. The degree of percentage is dependent upon the scope and complexity of the ledger contents. A typical fixed asset verification engagement would require anywhere from one-three (1-3) months – start to finish, depending upon the scope and complexity of the project.

The fixed asset verification service is comprised of five (5) stages:

Ledger Review and Analysis

The first step involves Lockwood process-specialists conducting a review of a client’s ledger asset list, often referred to as its fixed asset register (FAR). The ledger review entails breaking down the asset register into categories of assets. Identifying the categories enables Lockwood process specialists to categorize ledger assets into classifications such as tangible or intangible assets. As part of this exercise, Lockwood researches entries such as purchase order numbers and project codes, or other line items that may be bundled into asset categories or project numbers, and which might provide a misleading profile of asset counts or values.

Once a ledger has been parsed, it is analyzed in order to determine the best approach for executing the asset count and verification. The ledger review and analysis become the foundation for a series of management reports. These reports define the operating metrics to be used as a guide in the inventory verification stage of the project. They include such categories as asset-value thresholds for defining the set of assets to be counted, the number of assets to be validated, and their location. The ledger review also positions Lockwood for making recommendations on process changes in financial reporting and data collection.

Verification Planning

Once the ledger review is completed and operating metrics are agreed to, an asset verification plan is constructed that describes the verification process, and outlines responsibilities, deliverables and schedules. The plan is crafted by Lockwood and submitted to the customer for acceptance. Once accepted, the plan is used as an operations guide for the verification stage.

Prior to actually performing an asset verification, the plan drawn up by Lockwood is tested and validated. The plan is submitted to the client operational and audit personnel for review and feedback and is adjusted as needed. Then Lockwood conducts a pilot or trial of the plan using the results to further refine it.

As a matter of course, Lockwood modifies plan and its implementation record as the project evolves, thereby ensuring that a reliable historical reference record of the project is developed. The plan defines the process, methods, schedules, responsibilities as well as the final deliverable. The deliverable produces both validation of line items as well as recommended adjustments to the FAR, including but not limited to, correction of data elements such as locations, models, values, and additions and deletions of line items.

Physical Asset Verification

During the asset verification stage, Lockwood inventory specialists, under the direction of dedicated inventory controllers, go on-site to locate and physically verify each tangible asset. It is during this stage of the project that current asset information is gathered, asset-tracking technology such as barcoding or RFID is deployed, and project progress measurements are conducted using the pre-defined operating metrics as the baseline.

In general, asset verification entails having Lockwood teams go on-site to each location, seek out each FAR asset, verify its existence, gather current asset information such as its location, barcode or RFID tag the asset, and record the data. As an adjunct offering, while on-site, Lockwood can seek and collect asset information for those assets that are not currently listed on the ledger, but are of obvious material value and consequently should be accounted for, and appraise the asset’s value for inclusion into the ledger.

Information Management

The primary objective of this service is to generate accurate asset and related information in an organized manner that is easy to use and compatible with existing business requirements and reporting mechanisms. Lockwood creates data structures that display information hierarchies that show dependencies between related items. For example, if a computer chassis is tagged, the internal components, such as hard drives or video cards, can be shown as logically linked in the data base, and therefore tracked and reconciled. The hierarchical representation is also useful for linking purchase order numbers to ledger line items that reflect the PO. This is also useful for project codes. In the latter case, information is staged in an intelligent data management system which grants unrestricted-use licenses to customers. The system incorporates many useful automation tools such as cycle counting and physical inventory verification, enabling users to implement and support inventory management best practices. The system is used by customers to generate easily defined ad hoc management reports as needed.

Lockwood provides system integration and first year support as a standard part of its product offering.

Asset Management Education

The successful use of Lockwood’s technology and systems is based on being well informed and trained on the methodologies of asset management processes and tools. Generally, poor asset management and the failure to account for assets are caused by either the lack of information or by the use of inaccurate information in the first place. In either case, the lack of good results is based on a failure of effective controls – both procedural and logical. Developed over years of experience assisting customers throughout the world, Lockwood has developed a set of methodologies and practices that constitute industry best practices for asset lifecycle management.

Lockwood provides best practices consulting which includes the evaluation of current internal controls and practices, recommendations for improved asset management performance and the development of implementation guidelines. These activities are supported by Lockwood led training and workshops in asset management best practices.

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