Follow Those Assets
- By Michael Fickes
- November 1st, 2006
Maybe 10 to 15 percent of schools actually track assets with a system that meets all of their financial and reporting requirements, said Kevin McGrew, CEO of TechTrack Solutions, Inc. in Vancouver.Another 20 percent have a system, but it is underutilized and really doesn’t track assets. About 40 percent have silos — department-based systems that track assets within departments but not across the university. Twenty-five to 30 percent of schools have no system at all — they do it with a pencil and paper.
I would estimate that 75 percent of schools aren’t dealing with this issue properly.
That’s surprising, given the fact that the Government Accounting Standards Board (GASB, pronounced Gaz-be) issued GASB Statement 35 requiring institutions to track assets at the end of 1999. GASB 35 amended GASB 34, which required state and local governments to report all capital assets and infrastructure and record depreciation using accepted accounting principles. GASB 34 excluded colleges and universities. GASB 35 thought better of that and told colleges and universities that they had to start reporting assets, infrastructure, and depreciation, too.
Without going into the new kinds of financial statements, GASB 35 requires of state educational institutions — and private institutions that make use of federal funds — to follow the new accounting rule requiring schools to do a better job of tracking assets. Schools that could not prove they had assets couldn’t claim depreciation and couldn’t accurately complete the federal reports necessary for receiving federal funds that might otherwise be available to them.
Prior to GASB 35, the university’s financial office would send a printed report to each department. The form basically saidthe following items have been recorded in our system as your assets. Make sure you have them. Someone in the department sent a student out with a pencil and the list to look for those items. The student would find the photocopier, a couple of computers, some furniture, and some other things. But after a while, the student often tired of the game and just checked items off the list.
GASB 35 demanded that colleges and universities prove they had the assets they said they had. Officials now had to submit an audit trail or paperwork showing that a person had actually gone out and touched the items being claimed. Everyone panicked at that idea, said McGrew.
A couple years later the Sarbanes Oxley Act, passed in the wake of the Enron scandal, panicked the private sector by requiring a similar audited accounting of all capital assets recorded on the books of public and private companies.
Still, only a few institutions have begun to satisfy the requirements accurately. The University of Texas at San Antonio (UTSA) came up with an answer in late 2001, when the finance office put out a request for proposal for a software system capable of tracking inventory. TechTrack won the competition with a solution that included barcodes, scanners, and software capable of accepting data from the scanners.
We did an initial physical inventory, McGrew said. And we populated our software solution with that data. Today, UTSA uses barcode scanners to check and manage their assets.
UTSA is a large university with 18,400 students and 2.08 million gross sq. ft. of space. The TechTrack audit found approximately 21,000 assets in more than 30 buildings on three campuses. During the audit, TechTrack attached barcodes to those more than 21,000 assets in more than 30 buildings on three campuses. Asset locations included classrooms, offices, research labs, athletic facilities, education buildings, health care facilities, and telecommunications and computer laboratories. The total value of the assets found and logged into the system came to a stunning $90.5 million.
Thanks to the detailed accounting provided by TechTrack, UTSA wrote off approximately $1.5 million in assets and put to use approximately $600,000 worth of fixed assets that had previously been identified as lost or stolen. In addition to the financial benefits, UTSA is now able to meet all state and federal reporting requirements initiated by GASB 35.
It is also easy to manage assets, McGrew said. Tracking software can generate reports on categories of assets owned by each university department. So there is not only more accountability related to financial reports, but also more transparency for managers trying to control costs.
Within a few years, advancing technology will make tracking assets even easier — at least for those that have institutionalized some kind of procedure based on tagging assets with barcodes.
The next big advance will replace barcodes with radio frequency identification (RFID) tags. This will speed the inventory process by eliminating the need to reach out and scan individual barcodes. An RFID scanner activates RFID tags within a few meters. Once activated, tags report their identification number to the scanner, which records the data and sends it, often wirelessly, to the main inventory system. When this technology becomes available, maintenance workers with RFID scanners will be able to inventory assets while making their afternoon rounds.