Case 1:
Asset Audit- Verification of IT Assets for a government IT Agency
Requirements
The Agency is seeking an Asset Audit service provider to verify various information technology assets at 10 sites in Australia. This will involve counting and verifying between 7,000 and 10,000 IT assets.
Barcodes
The Agency requires a unique barcode to be attached to each asset. Most assets will have an existing barcode attached, but for assets found without a barcode, a temporary unique barcode will be attached (supplied by the Agency), and relevant asset data collected. Barcodes will be placed on each asset in a location to be agreed with the Agency.
Data Collection
At the commencement of data collection, RGIS will provide an asset assessor (or team) who will work systematically from a building floor plan, moving through each area identifying and collecting any relevant asset data. For Data Centres, RGIS staff will work in teams of two so that both the front and back of racks can be accessed simultaneously. This will raise the cost of the stocktake but negate the difficulty of accessing serial numbers.
For this project, each existing asset register record must be matched against the existing Agency asset register. For assets that are clearly labelled and identifiable, this will be straight forward; whereas assets not labelled will need all data fields collected.
For difficult to access areas such as server rooms, help will be supplied by the Agency staff to determine asset descriptions, as well as any assets that are not owned by the Agency.
Given the nature of the Agencies requirements, we assume a data collection rate of about 25-30 assets per hour and have based our fee estimate accordingly.
Data Fields Collected
RGIS asset auditors will collect and report on the following data fields.
- Site/Floor/Room/Rack #/ Desk #
- Barcode
- Description
- Make
- Model
- Serial Number
- Comment
Reconciliation
After detailing the assets, where possible, they are individually reconciled with your existing asset register. At this time, where available, asset descriptions, serial numbers, room changes, asset categories and the like are updated.
RGIS provide 3 reports to assist with the reconciliation process:
- Found assets
- Not found assets
- New assets
The completed asset data will then be formatted to suit the reporting requirements of The Agency (MS-excel format) and forwarded for checking and verification. RGIS welcome any queries at this point. After adjustments are finalised, a complete report will be prepared and sent to the Agency.
Results
RGIS counted approximately 7,700 assets over 11 sites. Of these about 4,500 were considered ‘Found’ assets i.e. they were matched to the existing asset register either by barcode, serial number or description. The remaining 3,200 assets were considered ‘New’ or not matchable with the existing data. In addition, RGIS reported that approximately 7,500 assets on the existing register were not located (including approximately 1,500 retired assets).
Approximately 320 hours were spent in data collection on this project, enabling a count rate of about 24 assets per hour, which was within the guidelines set. In addition about 30 hours were spent reconciling the counted data with the existing register.
Issues
Some issues that arose during the data collection and reconciliation are as follows:
- Data collection was slowed down due to lack of available Agency staff to escort RGIS data collectors. In addition, for some sites, too many RGIS staff were allocated.
- Being a company that looks after sensitive government information, many of the servers and network equipment were not able to be accessed properly i.e. As RGIS staff were instructed not to touch any wires attached to equipment in data centres, important information such the serial was unable to be collected or verified.
- As the Agency only engaged RGIS to count the 11 largest sites, the number of assets not located (approximately 6,000 plus 1,500 retired assets) was very high. This would mainly be due to the following:
- Many assets belonged to sites not visited by RGIS
- Many assets that had been long retired had not been reported to the Agencies asset maintainer.
- A high number of MFD’s that were on the register are now under lease agreements.
- A high number of low value assets were not required to be verified by RGIS.
Summary
RGIS basically conduct two types of asset audit, both of which require a full count of assets using a definition agreed on between RGIS and the client.
Reconciliations
There are typically two types of asset reconciliation types:
- With a depreciation schedule – This can be very difficult due to the following lack of information in the schedule:
- Insufficient information – No make, model, serial number or location detail
- Lines Bulked – Sometimes assets are added to a depreciation schedule as a bulk line (e.g. “Furniture”, “Computer x 24”, “XYZ Procet” ). These assets either have to be split before reconciling, or cannot be reconciled at all
- Miscategorising – If an asset is categorised incorrectly it is sometimes overlooked in the reconciliation
- With an asset register – This is usually easier to reconcile against as most asset registers have more detail than depreciation schedules, however the same matching problems can arise.
Valuations
RGIS typically are engaged to do valuations for the following reasons:
- Sale of Business – Typically a market value or depreciated replacement cost is applied.
- Taxation – Typically a market value or depreciated replacement cost is applied, but reinstatement value is often also supplied.
- Insurance – Typically a reinstatement value is supplied.
- RGIS employs certified practicing valuers and is a member of AVAA, Auctioneers and Valuers Association of Australia and CPV, Certified Practising Valuers
Ultimately the type of asset audit conducted is up to the client, and as can be seen from the two case studies, they usually combine a combination of both reconciliation and valuation, usually with barcodes attached, except for sale of business valuations.
Valuation Definitions
Market Value. The estimated amount for which an asset should exchange on the date of valuation between a willing buyer and willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion.[2] In accounting standards, Fair Value is normally equated to Market Value.[3]
Depreciated Replacement Cost. The current cost of replacing an asset with its modern equivalent asset less deductions for physical deterioration and all relevant forms of obsolescence and optimisation.[4] Depreciated Replacement Cost is typically used where there is insufficient market data to arrive at a Market Value.
Reinstatement Value. The estimated amount for replacing an asset by similar property in a condition equal to, but not better or more extensive than, its condition when new.[5]
[1]ANZVPS 2008, International Valuation Application 1, paragraph 3.1
[2] ANZVPS 2008, International Valuation Standards 1, paragraph 3.1
[3] ANZVPS 2008, International Valuation Standards 2, paragraph 6.2
[4] ANZVPS 2008, International Valuation Application 1, paragraph 3.1
[5] ANZVPS 2008, Australian Valuation Guidance Note 2, paragraph 4.8
RGIS conducts asset audits in all areas of New Zealand.