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Original Title: SOP for Fixed Assets Management Pptx JN9OBYJQ
Uploaded by Ankit_cooldude on Mar 30, 2017
Standard operating Procedure Fixed Asset Full description
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'H(S PO"() *O$M&+' &S'AB"(SH&S PO"() , P%O&*$%&S FO%
AO$+'(+- OF F(.&* ASS&'S AS P&% %&"&/A+' AO$+'(+S'A+*A%*S0
(' S'A+*A%*(&S 'H& P%O$%&M&+' OF F(.&* ASS&'S (+
AO%*A+& 2('H 'H& AP('A" P$%HAS& B$*-&'0
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'his po!icy document 3i!! app!y to the assets managed by the
company at a!! its units0
(t 3ou!d a!so emphasi4e on the additions and de!etions made to the
5xed assets0
(t a!so focuses on the proper documentation of these assets0
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
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AB Sugar Mi!!s "td
#
Fixed Assets Budget Procedure:
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ost Bene5t Ana!ysis
Modi5cation
Ac7uisition
10
CCE NORTH
Budget
Preparation
Acti6ity 2ise
Budget Appro6a! by :
Asset !assi5cation:
M*
&*
 FO
 $nit Head
 'echnica! Head
 Po3er *eptt0 Head

"and
Bui!ding
P!ant , Machinery
Furniture , Fixtures
O<ce &7uipment
/ehic!es
Others
(ntangib!es
18
#8
98
8
;8
=8
>8
?8

Post Budget Acti6ity:
omparison 3ith
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Ac7uisition Process of apita! Assets:
908 %eceipt:
#08 Purchasing :
108 (ndenting :
nusratjahan
%eceipt at $nit
$nit
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Ana!ysis of (ndent
Speci5c
*eptt0
-ate O<cia!s 6erify
Asset as per documents
, ma@e &ntry in -ate
(n3ard %egister
(n6ite uotations at
!east three8
%aises (ndent to
Stores
Authori4ed by
respecti6e *eptt
Head
Stores chec@
a6ai!abi!ity , ensures
that indent is 3ithin
capita! budget
Prepare omparati6e
hart
Stores %ecei6e AssetC
6eri5es Bi!! , arrange for
inspection of Asset by the
$ser
Se!ection of /endor
(nspection of Asset by the
$ser
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2 pages
INVENTORY OF PPE
Kang Daniel
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Preparation of M%+
(n case of Sing!e
uotation chec@
reasonabi!ity of terms
+ett %e70 sent to
entra!i4ed Purchase
*eptt0
3 pages
M%+ a!ong 3ith PO ,
(n6oice sent to Accounts
✕
%aise PO
Posting in Accounts
*eptt0
AB Sugar Mi!!s "td

Accounting 'reatment :
108 Ac7uisition
*A'&
/A"$&
Asset does not
re7uire
(nsta!!ationD(nspecti
on
Asset re7uires
(nsta!!ationD(nspectio
n
 apita!i4ation ,
 apita!i4ation ,
Accounting &ntry
on the *ate of
%eceipt of Asset
Accounting &ntry
on the *ate of
%eceipt of
ommissioning
erti5cate from
the 'echnica!
*eptt0
 'i!! such dateC
asset sho3n as
apita! 2or@ (n
Progress 2(P8
18
#8
Purchase Price
*uties , 'axes nonE
reco6erab!e8
Freight
Borro3ing ost As per AS 
1=8
(nsta!!ation harges
(nsurance &xp0
Forex F!uctuations As per AS 
118
"ess -o6t -rants as per AS 
1#8
"ess 'rade *iscounts ,
%ebateC if any
98
8
;8
=8
>8
?8
G8
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#08
*epreciation
 Definition : As per AS-6, it is a measure of loss in value of an asset arising from use, passage of time,
obsolescence due to change in technology & market conditions.
istorical !alue or "evalued !alue
 Depreciation depends upon :
#seful $ife of the Asset
%stimated "esidual !alue
 *epreciab!e Amount  Historica! /a!ue or %e6a!ued /a!ue  &xpected %esidua!
/a!ue
Asset forms an integra! part of the
main asset
 Addition%'tension of Asset :
AdditionD&xtension to
be depreciated
separate!y
+o
)es
AdditionD&xtension to be
depreciated as per same rate
, o6er same !ife
 2here the historica! cost undergoes a change due to Iuctuation in exchange rateC price
adustment etc0 depreciation on the re6ised unamorti4ed amount shou!d be pro6ided o6er the
ba!ance usefu! !ife of the asset0
 $sefu! !ife may be re6ie3ed periodica!!y after ta@ing into consideration the expected physica!
3ear and tearC obso!escence and !ega! or other !imits on the use of the asset0 (n case of change in
usefu! !ifeC depreciation shou!d be pro6ided ta@ing into consideration the re6ised usefu! !ife o6er
the remaining no0 of years0
AB Sugar Mi!!s "td
=
*epreciation as per Sch0 1 of ompanies Act:
 As per Sec0 9;K of the ompanies ActC a company is re7uired to pro6ide depreciation as
per rates speci5ed in Sch0 1 gi6en be!o30 Ho3e6er in case the management expects the
usefu! !ife of the asset to be higherC depreciation at !o3er rates can be pro6ided 3ith proper
usti5cation for the same0 A!though Higher %ates can be pro6ided0
-enera!
%ates
Asset (lock
)D! "ate
S$* "ate
+actory (uilding

/./0
1on +actory (uildings 23ffices, 4odo5ns, %mployees uarters %tc.7
8
.6/
9lant & *achinery 2continuous process plants7
8.//
8.;
*otor-cars, motor cycles, scooters & other mopeds
8.;<
<.8
*otor (uses
/
./
Data processing machines including computers
0
6.
4as cylinders including valves & regulators
0
6.
Sugar )orks "ollers


+urniture & +ittings
;.
6.//
+ot3ithstanding anything mentioned in this Schedu!e depreciation on assetsC 3hose actua!
cost does not exceed 56e thousand rupeesC sha!! be pro6ided depreciation at the rate of
hundred per cent0 Ho3e6erC if the aggregate 6a!ue of assets purchased exceeds 1KL of the
existing 6a!ue of its b!oc@ than such assets shou!d be capita!i4ed0

 ntangib!es shou!d be amorti4ed as per AS  #=0
=
AB Sugar Mi!!s "td
>
3.) Sale & Discard of Fixed Asset :
*iscard
SA"&
*ate
*ate
/a!ue
*ate on 3hich
the asset is
retired from its
acti6e use
Asset to be
6a!ued at
!esser of +et
Boo@ /a!ue or
+et %ea!i4ab!e
/a!ue
/a!ue
*ate on 3hich the
right o6er the asset
is sacri5ced i0e0
(n6oice *ate
(n6oice /a!ue
Pro5t , "oss to
be routed
through PD"
Pro5t , "oss to
be routed
through PD"
4.) Capital Work In Progress CWIP) :

=t is an asset 5hich is not completed to be used. All e'penses in relation to the >)=9 should be debited
to >)=9 Ac. )hen the asset is completed & ready to be used then Amount should be transferred to the
"espective Asset Ac. uarterly revie5 should be done in order to ensure that e'pense in relation to >)=9
is debited to >)=9 Ac & not in the respective e'pense Ac.
AB Sugar Mi!!s "td
?
!.) "e#al$ation of an Asset :
 Assets are valued at istorical >ost in the books of accounts. =n the subse?uent years
the value of asset could be higher or lo5er than its present book value due to the inflationary conditions
of the economy.
$P2A%*
+et Boo@
/a!ue
%e!ated to pre6ious
decrease
+O
)&S
*O2+2A%*
%e!ated to pre6ious
increase
+O
redit to PD" ADc to
the extent a!ready
charged to PD" ADc ,
the excess if anyC to
%e6a!uation %eser6e
harge the
dierence to PD"
ADc
redit the dierence
to %e6a!uation
%eser6e
)&S
*ebit to
%e6a!uation
%eser6e to the
extent a6ai!ab!e ,
charge the ba!ance
to PD" ADc
+ote: N+o means 5rst time re6a!uation0 N)es means second and subse7uent
re6a!uations
AB Sugar Mi!!s "td
G
%.) Ipairent of an Asset :

As per AS @ ; , an organiation should make an assessment of the recoverable value of all its fi'ed assets
at every balance sheet date to find 5hether an asset needs to be impaired based on the factors given belo5 :
Factors causing
(mpairment
%'ternal
=nternal
9hysical
Damage to an
Asset
%arlier Disposal
of an Asset

>arrying Amt of
Assets B *arket
>apitaliation of
3rganiation
Significant
Decline in
*arket !alue
Decline in the
%conomic
9erformance of
Asset
>hange in
*arket =nterest
"ate
As per AS - ;, if the "ecoverable !alue of an Asset is less than its >arrying !alue than the asset should
be revalued at the "ecoverable amount by charging the difference to 9 & $ Account kno5n as =mpairment
$oss.
"ecoverable
Amount :
>arrying Amount :
=mpairment $oss :
"&SS

igher of
1et Selling 9rice
or
!alue in #se
1et (ook !alue of
an Asset
Co be debited to
9 & $ Ac
AB Sugar Mi!!s "td
1K
Fixed Assets 'agging , oding Process:
'(e process of scientificall n$*ering fixed assets is called tagging. '(e p$rpose of 'agging
assets is to track t(e o#eent of assets fro one place to anot(er place. A tag *ar code or
$ni+$e n$*er) (elps in #erification of t(e existence of assets and t(eir location, aids in
aintenance, pro#ides a coon gro$nd for co$nication *et-een t(e Acco$nts
Departent and t(e end$sers and recording t(e net *ook #al$e of asset in case of sale /
scrapping. All fixed assets $st *e tagged except land, *$ilding etc.
Fixed Asset
%eceipt
(nspection
Accounting
%ecording the
ode in FA% if
generated
manua!!y
ode generated
either through
system or manua!!y
'agging of such code
on Fixed Asset
AB Sugar Mi!!s "td
11
Fixed Assets %egister FA%8 :
2hat is FA% 
(t is a register sho3ing a!! the permanent assets o3ned by the company0 (t sho3s the 7tyC
6a!ue , !ocation of these assets0 Any de!etion and addition toDof assets are a!so recorded in
this register0
FAR V/s Stock Register
Stock "egister
FA"
'o keep record of goods recei#ed & iss$ed
'o exercise effecti#e control o#er t(e Fixed
Assets (eld * t(e copan
0sed for ites -(ic( are not peranent
0sed for assets -(ic( are peranent in
nat$re
Contains lo- #al$e ites
Contains relati#el (ig( #al$e ites
Signi5cance
:
&ecti6e ontro!
Pro6ides 5na! /a!ue of
FA for 5nancia!
statements
A%O omp!iance
AB Sugar Mi!!s "td
1#
ontents of FA%
Asset
ode
"ocation
Asset
*escriptio
n
uantity
Asset
ategory
*uties
,
'axes
Basic
/a!ue
(nsta!!atio
n harges
Freight
Supp!ierQ
s +ame
*epreciatio
n
ost
(n6oice
+o0
Forex
F!uctuation
s
(nsurance
(nterest
ost
AB Sugar Mi!!s "td
19
+A" Alteration
FAR 5ill be updated once in a quarter or six months if it is maintained manually or
simultaneously if it is system generated. =t 5ill be updated for the follo5ing reasons :
Pro6iding
*epreciation :
Sa!e C
*iscarding C
*emo!ition of
Asset :
Addition of
an Asset :
 A!! Fie!ds
(nter $nit
Asset
'ransfer :
 *epreciation
%ate
 *epreciation
Amt0
 A!! Fie!ds
 "ocation
 Additiona!
duty , taxes
 +A" must be Eearly revie5ed for ensuring its accuracy by an appropriate authority in the
+inance Deptt.
AB Sugar Mi!!s "td
1
Physica! /eri5cation :
 Obecti6e:
'o 6erify the actua! existence of the boo@ assetsC
chec@ their condition , pro6ide for adustments shortDexcessC if
any8 of 5xed assets found during physica!0
Physica!
/eri5cation
Po!icy
'eam Members:
Stores Personne!
 &xpert from 'echnica!
*eptt
 Personne! from $ser
*eptt
 Personne! from Accounts
*eptt
 Finance Personne! from
HO
 (nterna! Auditor
Physica!
/eri5cation
%eport signed
by 'eam
Members ,
$nit Head
'enure:
Once in three
years
Adustments
re!ating to
&xcessDShortag
e by the
Finance Head
AB Sugar Mi!!s "td
1;
Physica! /eri5cation
Process
(ntimation by HO personne! to unit head 6ia mai! regarding Phy0
/eri5cation Program sho3ing its dateC team membersC
procedure etc0
-M for3ards the mai! to stores , engg
deptt0
Physica! /eri5cation conducted on the decided date by the
respecti6e team
Based on the Physica!C a 'a@ing %eport must be prepared signed by the team
members and unit head
Such %eport must be compared 3ith the FA% and dierences noted a!ong
3ith reasons
Based on dierences a %econci!iation Statement must be prepared
Such Statement must be presented before higher authority
!i@e FO , &*
After their appro6a! necessary actions to be ta@en ,
adustments to be made in boo@s
AB Sugar Mi!!s "td
1=
Physica!
%eport
1/s
FA%
*ierences in FA% , Physica! /eri5cation :
Found in
FA% but not
in Physica!
Found in
Physica! but
not in FA%
Misappropriat
ion of Asset
Asset sent
out on
returnab!e
basis
2rong &ntry
or *oub!e
&ntry (n FA%
Asset has
been
Scrapped
Ac7uisition
entry not
done in FA%
Sa!eD 'ransfer
entry omitted
in FA%
(nsta!!ationD
(nspection
Pending
Asset recd0
'hrough
inappropriate
procedure
Asset recd 6ia
inter unit
transfer
AB Sugar Mi!!s "td
1>
AS =  Accounting for
*epreciation
AS 1K  Accounting for Fixed
Assets
AS 11  Accounting for eects
of change in Foreign
&xchange %ates
Accounting
Standards
re!ated to Fixed
Assets
AS 1=  Borro3ing ost
AS #=  (ntangib!e Assets
AS #?  (mpairment of Assets
AB Sugar Mi!!s "td
1?
ompanies AuditorQs %eport8 Order A%O8C #KK9
As per paragraph (8 of this orderC an auditor is re7uired to comment on
proper maintenanceC physica! 6eri5cation and maor disposa! in re!ation to 5xed
assets during the 5nancia! year0 'herefore A%O #KK9C re7uires a ompany to :
Maintenance of proper
records sho3ing:
Maor *isposa! of
Fixed Assets
Physica! 6eri5cation
 *escription of Asset
10
 ategori4ation , "ocation
of Asset
 Purchase *etai!s
#0
 *epreciation *etai!s
 %e6a!uationD(mpairment
90
*etai!s
 *etai!s regards Sa!eC
*iscarding , *estruction of
Asset
At %egu!ar
(nter6a!s at !east
once in three
years8
%eport preparation
sho3ing materia!
discrepancies
Proper adustment
of these in the
boo@s
10
#0
Proper Accounting
As per AS  1C if this
aects going
concern then its
proper expression in
5nancia! statements
is necessary0
AB Sugar Mi!!s "td
1G
Activity Wise Responsibility Chart
2hat 
Ho3 
2ho 
Authori4ed By 
%e6ie3ed By
%e6ie3 Period 
Budget
Preparation
%efer S!ide
+o0 
Finance
*eptt
hief Financia!
O<cer FO8
&xecuti6e
*irector
Once in 'hree
)ears
Budget 6Ds
Actua!
omparison
%efer S!ide
+o0 
Finance
*eptt
hief Financia!
O<cer FO8
&xecuti6e
*irector
At the end of
year
Ac7uisition
%efer S!ide
+o0 ;
Purchase
*eptt0
hief Financia!
O<cer FO8
&xecuti6e
*irector
)ear!y
Accounting
%efer
S!ides = 
11
$nit
Accounts
*eptt
*eptt0 Head
$nit Head -M8
uarter!y
Asset
'agging ,
oding
%efer S!ide
+o0 1#
$nit
Accounts
*eptt
*eptt0 Head
$nit Head -M8
)ear!y
FA%
$pdating
%efer
S!ides 19E
1;
$nit
Accounts
*eptt
*eptt0 Head
Finance
Manager
)ear!y
Physica!
/eri5cation
%efer
S!ides 1=E
1?
Physica!
/eri5cation
'eam
$nit Head
hief Financia!
O<cer FO8
Once in 'hree
)ears
A%O , AS
omp!iance
%efer S!ide
1G , #K
Accounts
*eptt0
HO Accounts
*eptt0
hief Financia!
O<cer FO8
)ear!y
#K
AB Sugar Mi!!s "td
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