A Complete Guide to Asset Inventory Audit Procedures

Any business that uses assets should hold a regular asset inventory audit in order to track important data like the number, condition, and location of all assets. The audit is a cost-effective method that forms a part of your asset tracking strategy, allowing you to understand your operation while keeping costs low.

Asset inventory audits are about learning information that can drive business decisions to cut asset tracking costs, boost productivity, ensure safety, and much more. In other words, a good audit will more than pay for itself.

Here, we’ll give you all the relevant definitions, explain the steps that any asset inventory audit will require, and let you in on the best tips for making the most of your own audit.

In this guide:

• What Is an Asset Inventory?
• What Is an Asset Inventory Audit?
• How to Build an Asset Inventory Audit Procedure
• Inventory Audit Best Practices
• Next Steps: Conducting Your Own Asset Inventory Audit

What Is an Asset Inventory?

Asset inventories are the paperwork that helps you document all your assets. It identifies and groups types of assets including physical assets (vehicles, furniture, and equipment) and non-physical assets (deeds, contracts, IP, and licenses).

The inventory lists key details for each, which can include information that never changes, like the make and model, or conditions that will add up over time, like the number of oil changes.

The information can be as detailed as you need, with data that’s tailored to your specific business. For instance, if you have an asset tracking system that uses battery-powered tracking units to log the engine hours of your construction equipment, you can track whether the equipment has been used outside of working hours.

Keeping a good inventory list means that you’ll always have useful data which can be turned into well-informed business decisions. You’ll know which assets need to be replaced, whether anything has been misplaced or stolen, and when you should buy more of a specific type of asset in order to better optimize productivity overall.

What Is an Asset Inventory Audit?

An audit is a hands-on assessment of all your business’s physical and non-physical assets. It verifies that your operation still owns the assets, as well as updating or verifying any additional information on your inventory list, like the asset’s current location and condition.

The point of an asset inventory audit is to maintain an accurate asset inventory: Monthly or quarterly audits will ensure that your inventory list is up to date. Without regular audits, your inventory list can’t be trusted, and all that data stops being useful.

Once an audit is complete, you should use the new data to search for any discrepancies since the previous audit, as this information can guide your asset-related business decisions in the next quarter or the next month. Audits ensure your business will remain in compliance, reduce downtime, and boost overall efficiency.

How to Build an Asset Inventory Audit Procedure

So how can you create your own inventory auditing procedure for your business assets? Perfecting the audit might take years, but you can get started today. Here are the basic elements to keep in mind while creating your auditing system.

Get Asset Tracking Software

Asset tracking and management tools will cut down on the time you spend auditing, since they automatically collect a lot of the data you’ll need. Some might even let you generate a report with a single click — although we always recommend taking the time to manually inspect your hardware to check for wear and tear.

Different asset tracking systems are designed for different types of assets: Barcode or RFID trackers are best for small assets like office supplies, while GPS trackers are best for powered assets like vehicles and machinery.

Depending on your needs, a tracking system may not cost you anything: We’ve put together a guide to the best free asset tracking software. Using asset tracking spreadsheets are another tempting free option – either instead of, or in addition to, asset software solutions.

Consider Grouping Your Assets

Grouping your assets by type will make the audit easier to complete in sections, and may help guide which individuals or teams are responsible for which part of the audit. Typical asset groups to consider include:

• Vehicles and heavy equipment
• Hardware (laptops, printers, monitors)
• Software (licenses, paperwork, licenses)
• Network devices and other accessories (routers, HDMI cables, keyboards and mice, chargers)

Auditing hardware will likely take longer, since it involves physically finding the assets, while software should be centralized in a virtual location.

Plan Your Audit Timeline

Figure out how often you plan to complete an audit: Monthly, quarterly, or annually. A larger operation may benefit from more frequent audits, since the impact of asset misuse will happen on a larger scale. You’ll want to dedicate time for an audit into your team’s workflow.

Determine Your Audit Takeaway

Once the audit is complete, you’ll need to analyze the data, looking for findings that reveal something new about how your business assets are used. Some questions that can guide you might include:

• Which assets are being used too much? Too little?
• Are any assets missing? Damaged?
• Is any associated paperwork or software out of date? Incorrect? Unclear?
• Are any assets assigned to the wrong person or in the wrong location?

This analysis will determine which employees are accountable for any misuse or, alternatively, for any unexpectedly well maintained assets!

Determine Your Post-Audit Actions

Audits should be actionable. Once they are complete, you need to follow through on any recommended actions, which might include preventative maintenance or corrective maintenance. This is easier said than done, since those actions may not make it onto your team’s (likely packed) schedule. You’ll need a manager who’s willing to press for a follow-up meeting and will ensure the audit leads to any needed changes.

Learn how to build a custom asset tracking system here.

Inventory Audit Best Practices

Once they’re planned out, audits should be fairly smooth processes. However, your operation should remain flexible enough to reevaluate and improve the process when needed.

• Asset tracking systems: Tagging items with barcodes or QR codes makes them easy to scan and record their location. This speeds up audits while increasing data reliability.
• Routine team training: You might have a plan for auditing process. Occasional training sessions dedicated to auditing will ensure your team also knows that plan.
• Document the auditing process: Recording each audit and its results will ensure consistency and accountability over the auditing process. Timelines, stakeholder information, and FAQs can be lost over time without documentation to preserve them.
• Loop in your accounting department: One big reason to conduct regular audits is determining the current and future value of the assets. An accountant will be the best person to figure out the rate of depreciation based on the data gathered in an audit.

These best practices are worth considering even when your audits seem to be working fine. They’re even more important to try if your audits need improvement.

Next Steps: Conducting Your Own Asset Inventory Audit

As your business grows, asset inventory audits will become more important to your stability and success. To benefit, you should plan out a regular audit while your list of assets is still short. From there, it should be easy to scale the process up.

To start with, try putting together an inventory, listing all your assets and any key data to know about about each. From there, start building a process for updating that information on a regular basis. Asset tracking systems, resources, and team training sessions can all help.

In the end, any asset inventory audit must be tailored to your unique business in order to help you understand and optimize your assets — and bolster your bottom line as a result.