Ghost and Zombie Assets can cause havoc to your inventory. An incorrect inventory can cause a company overages in tax payments or shortages in assets.
What are Ghost Assets?
In the IT world, the term “Ghost Asset” stands for any asset that is on your company books that are no longer in service. This accounts for any devices that have been lost, misplaced, stolen, damaged or disposed of. This is prevalent in most companies, as on average between 15-30% of the inventory on books are Ghost Assets. Using these averages, if a company has 3 million in assets on the books with 15% being Ghost Assets then there is $450,000 in assets that the company no longer owns. These assets in turn are costing the company around $75,000 a year in tax over payments.
What are Zombie Assets?
“Zombie Assets” are the opposite of Ghost Assets. These items can be found when performing a physical audit of your inventory; however, they do not appear in your registry of assets. Being able to track these assets will bring value to your company or organization, while helping you to avoid penalties for under reporting. Similar to Ghost Assets, companies on average have around 12% of their assets not accounted for in their electronic records. This means that when combining both Zombie and Ghost Assets, as much as 40% of your company or organization’s assets can be classified as one of these two.
So why Asset Management?
How can you make sure that your inventory is in compliance?
The first step is to look at your company or organization’s current method of managing its entire inventory. If you are currently using a manual method of tracking inventory through spreadsheets, you will have a difficult time keeping your records accurate past a handful of entries. The most accurate way to track this data is by having an automated system such as AssetRemix. These systems will help make the data entry and management more efficient by connecting to systems that your company currently uses such as active directory, API calls to your company’s databases and SSO sign-ons for security. The system also needs to have the ability for you to run detailed audit reports that can include from who you purchased the devices from, when you purchased them and how much you spent. Performing these audits will help you determine the depreciation value of these devices that have to be in accordance with all of the different GAAP accounting practices and IRS rules regarding write-offs and liabilities.