7th November 2012Charity fixed assets

Theyre not so much part of the furniture, they ARE the furniture and the buildings, computers and electrical equipment.

They are what accountants call fixed assets. It is easy to take them for granted, and many charities have no procedures in place to monitor either their use or their disposal.

Without a register of fixed assets, items could easily be mislaid or misappropriated without anyone being any the wiser. Regular reviews of such registers would enable the trustees and charitys management to spot if any particular items had gone missing, or if items were disappearing on a regular basis.

Replacing lost items can be costly. Where laptops are mislaid, there could be more serious consequences. For example, if personal data relating to the charitys donors or beneficiaries were held on a device that fell into the wrong hands, the charity might find itself in contravention of the Data Protection Act 1998, and liable to a fine.

Not to mention the possible damage to the charitys reputation and the potential for putting those individuals at risk.

A register of fixed assets will enable the charity to monitor its use of equipment, to assess how long assets are lasting, how much they are costing and whether future expenditure is necessary.

If the charity wants to replace assets after a certain period of time, for example to ensure computers are up to date, a fixed asset register will inform management of the number and type of computers that are required. All this information helps to inform cash-flow budgets, which are a key forecasting tool.

Such a register would also be a valuable tool when choosing the volume of assets to purchase. For example an educational charity looking to embark on a new programme of external seminars may wish to purchase extra portable projectors.

If a register were in place the charity would be able to assess accurately how many projectors it has already, against how many it will need in the future preventing either an under or over-purchase. This can be difficult without a register when assets are kept at a number of locations.

For accounting purposes, when assets are purchased the value is added to the accounting records. Where a register is not kept, items that are disposed of are rarely dealt with in the accounting system. This could lead to an overstatement of the value of fixed assets.

Better monitoring of such assets would aid in the decision to dispose or sell unused items, freeing up office space or possibly generating additional resources.

The Charity Commission provides specific guidance on the trustees responsibility to safeguard the assets of the charity from loss or damage, and to ensure their proper use within the charity. Their recommendations can be found on their website.

Setting up a fixed asset register and implementing robust monitoring procedures can be time consuming, but it is potentially a hugely valuable tool in the management of a charity.



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