ASSET DOCUMENTATION

Asset documentation involves a comprehensive compilation of all the existing assets with a view to sufficiently ascertain their respective location, use, conditions and values at any point in time. The management’s function of monitoring asset movements of any organisation is aimed at ensuring efficient and effective control and to reduce pilferage and this is only made possible through good assets documentation (Oladele, 2002). Asset documentation involves indexing with the number code that both indicate installed location and serialise each item in their locations; an asset ledger is then opened with specific entries.

Examples of forms used in asset documentation

At the end of the exercise, an administrator or the man at the helm of affairs would be able to correctly query the mis-location of movable items on seeing its reference number. Even more useful is the case and accuracy with which the Accountant can adjust his books when reports are made of assets that may be lost, damaged and disposed off. However, the system facilitates computerisation of all the assets under a particular organisation. It ought to be emphasised that any format used would supplement any existing accounting records.

The assets register is compiled on the basis of management application. Assets documentation also involves the day-to-day implementation of planned programmes for maximum socio-economic benefit. It includes titles perfection (where necessary) and documentation, payment of government charges, payment of insurance premium, selection of suitable tenants, collection of rent/sale negotiation and remittance rent proceeds. In order to achieve the desire result, be it private or public concern, there is need for the establishment of documentary basis for ascertaining the ownership rights and it is required for all modern management decision.

Significance of Assets Documentation

Assets documentation is very significant in any organisation as a tool for management decision or policy that will enhance the productivity of the organisation. Some of the major significance of assets documentation includes:

• Accountability: It is common knowledge that successive government administration try to run down their predecessors with declaration of empty treasuries and huge amount of debts. No successor ever declares his inheritance in terms of real assets. Some even convert public assets to private ownership in a situation where there is no proper documentation of the assets. A comprehensive assets register/records become imperative in presenting a balanced picture. Such records will state categorically the extent of government public assets holding and their monetary worth including use, location, c0onditon and their technical details. For proper accountability of public properties, comprehensive assets register is required. These are sine-qua-non to effective management and administration of public and private assets.
• Insurance policy: Insurance policy is implemented as part of assets protection programme. First, the reinstatement cost of the assets are determined and sums insured to replace the assets in question in the event of total or partial loss or damage by fire, flood, strike and civil commotion, vandalisation and other perils. With dwindling revenue in the ever-increasing demands thereon, assets belonging to the public sectors have adequate fire insurance cover as can be provided by any notable insurance company.

Public assets are in different forms with some highly prone to a lot of hazards, risks and uncertainties. These assets need to be properly and adequately insured against such uncertainties and risks. It may not be prudent and desirable for insurance companies to simply step in and replace items of assets lost to fire or any other insurable risks. It is therefore imperative to eschew unnecessary risks to professional risk bearers. This has become an attractive option for organisation to ensure continuity in assets utilisation. Furthermore, insurance policy generates confidence in planning and it is a good evidence of admissibility and administering assets documentation. The principle is that in the event of an insured risk accruing, the insurer will indemnify the insured to the maximum extent the cover takes. A cover that falls short of actual value of the assets would only guarantee a partial indemnity as the insurer would invoke the principle of ‘average clause’ normally entrenched in every insurance contract. On the other hand, and ‘over sized’ cover imposes undue burden by way of heavy premium payment, which are only windfall profit to the insurer.

From the foregoing, it can be deduced that Estate Surveyors and Valuers that are saddled with the responsibility of managing and administering real estate assets should deem it necessary to appropriately advise their respective clients on ‘insurance’ matters.

Types of insurance settlement under insurance policies include:

• Indemnity settlement
• Reinstatement settlement

Under the indemnity settlement, the insurer is compensated for its actual loss suffered less depreciation for age and obsolescence. On the other hand, the reinstatement settlement allows the insurer to be fully compensated for the total loss suffered without making allowances for any depreciation.

• Loan advance: From time to time, most organisations require loan advance from financial institutions to finance their respective capital projects. In such situations, the financial institution concern will normally require collateral security to support the application for such loan. The assets of public or private organisations can be presented in that regard.
• Budget control: The planning or expansion programmes, employment, schedules of dilapidation, maintenance culture and other related activities of any organisation are mostly based on reliable asset records. It has become the practice in advanced countries to involve good classification and referencing in their land resource management. The records are stored in such a manner that information can easily be retrieved and updated. It should be noted that the management and administrative functions of monitoring and securing assets to ensure efficient management and reduce pilferage is only possible with good and adequate record keeping.
• Assets sharing: Records of assets will be significant in the sharing of the assets for whatever reason. The documents will reveal at a glance the total assets holding and their value equivalent at a particular point in time.
• Easy identification and assertion of ownership rights: Many organisations are not certain about what they own, perhaps, because of incessant bureaucratic changes. The changes of baton are done under highly charged atmosphere and under such circumstances, useful records/information are not kept or deliberately not accounted for. In the process, many assets are lost and cannot be traced. The insertion of serial identification number to all assets will go a long way in solving these problems.
• Handing over notes: Comprehensive asset documentation will serve as a reliable source of information for the incoming personnel. This will afford them in acquainting themselves with the assets being entrusted to them. The asset record will show in detail the position of the assets in term of their respective location, repair condition, year of purchase, and perhaps, the value equivalent of those assets. In this regard, information technology provides the use of computer for storage and retrieval of information that are required for decision-making, policy formulation and implementation, and the general management of the organisation’s assets. This can be achieved through Microsoft (MS) excel with the use of data base system. The database is specifically designed and used as information management programmes relating to the assets of public and corporate organisations (i.e. fixed and current assets holdings, including liabilities).

References 

Ifediora, G. S. A. (1999). Valuation of assets of non-performing enterprises for privatisation. Being a paper presented at a workshop on special enterprise valuation.

Odiete, D. E. (1991). Estate surveying and valuation and the solid minerals industry. Paper presented at the NIESV 2001 Annual Conference, Jos.

Ojo, S. A (1991). Valuation of plants and machinery in Nigeria issues and problems. Paper delivered at International Workshop on Plant and Machinery Valuation.

Oladele, T. A. (2002). A critical appraisal of assets documentation as a tool for efficient management of public fixed assets. (A case study of National metallurgical development centre (NMDC), Jos. A critical analysis/thesis submitted to National Council of the Nigerian Institution of Estate Surveyors and Valuers in fulfilment of test of professional competence for admission into corporate membership of the Institution.

Olusegun, K. (2008). Property valuation techniques (2^nd ed). Lagos: Adro Dadar Publishers.

Tai, A. (1994). Valuation of properties for fire insurance purpose. A paper delivered at a seminar on effective fire protection for public and essential building in Nigeria.