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Migrated over from MifosForge - last edit on November 2, 2015.

Target releaseUnscheduled
Epic
Document status

DRAFT

Document ownerCameron Goldie-Scot & Upendo Mollel
Designer
Developers
QA

 

 

Fixed Asset Management

The Fixed Asset Management process covers the life-cycle of an organization's fixed assets including the purchase and recording of the fixed asset register, depreciation of assets, maintenance of assets, through to the disposal of an asset at the end of its life.

Fixed Asset

Also known as property, plant and equipment, a "Fixed Asset" is a term used in accounting for assets which cannot easily convert into cash. Compared with current assets such as cash or bank accounts, which are described as liquid assets, only tangible assets are referred to as fixed.

 

A typical fully Fixed Asset Management software module contains sub-modules as detailed in the table below:-

FIXED ASSET MANAGEMENT
Sub modulesScope
a) Fixed Asset Register(Basic)

Base ability for an MFI to track fixed asset

It shows details such as the book value of an asset, purchase details(Price, supplier name, date of purchase etc), status of an asset (sold, broken, stolen etc) and other details necessary for compliance, compute for depreciation and for tax purposes.

The fixed assets register should have but not limited to the following attributes;

Asset identification or serial number, acquisition date, description of asset, location, class of asset, cost of acquisition, accumulated depreciation ,net book value etc

b) Fixed Asset Depreciation(Advanced)Depreciation is an accounting convention that allows a company to write-off the value of an asset over time, but it is considered a non-cash transaction. This brings additional functionality for GL integration of the purchase, sale and depreciation of fixed assets it has attributes to;
  • Automates the calculation and posting of depreciation
  • Selling or disposing of Fixed Assets and also posts the appropriate GL transactions
 

Out of scope

c) Fixed asset maintenanceIt is the feature to allow for the scheduling and execution of planned and preventative maintenance, as well as recording of unplanned asset breakdowns.
  • Bring Planned and Preventative Maintenance to the system
  • Allow organizations to plan maintenance into the future and schedule preventative maintenance on Assets

 

Goals

This document will elaborate the details about requirements of a fixed asset module to MFI institution. The "Fixed Assets Management" module is an add on tool to manage the life cycle of an MFI fixed assets from purchasing, registration, through to the disposal of an asset. And with its advanced features, it will allow to calculate depreciation of an asset.

Note

Fixed Asset Register is taken as a priority feature first according to the necessity and its frequent use,  but the depreciation feature will be taken into account utilizing most of the works and inputs from the fixed asset register. The fixed asset maintenance will not be covered because it is mostly used by non microfinance institution such as manufactures.


a) Fixed Asset Register

Overview

Background and strategic fit

While employees may use a specific tool(s) that business uses internally, including but not limited to computers, table, software, or office equipment etc, these resources are ultimately belonging to the respective MFI and must be returned. 

Without an accurate method of keeping track of these assets throughout their lives and ultimate removal from service, it would be very easy for a MFI to lose control of them. Thus, is an important and a general concern of every MFI institution, regardless of size.

Different methods existing today i.e. manual, excel/word documents, or through a separate full fixed asset software package.

By integrating this fixed asset management module to Mifos X especially starting with (a) fixed asset register and later (b) fixed asset depreciation, the implementation will enable MFIs to efficiently and cost-effectively track, manage and report these important resources for any MFI.

Advantages

  • Reduce the risk of regulatory non-compliance
  • Eliminate ghost assets
  • Track asset assignment and returns with an employee
  • Reduce theft and losses
  • Audit support.

Assumption

  • New permissions will be created to allow add, edit, delete or update of a fixed asset.
  • Some GL permission will be modified to allow account for a new fixed asset registered
  • New GL for fixed asset classes will created
  • An asset is interfaced with GL by its asset class.
  • In registering an asset, a system  journal entry is created that debits the asset account for the appropriate asset class and credits the expenditure account
  • There will be a financial activity mapping to general ledger account when registering an asset.

Requirements

#TitleUser StoryImportance
1Create unlimited number of fixed asset

As an accountant I want to be able to enter all details of an asset such as name, description, price, etc so as to track all the details of asset when needed

Must have
2

Define asset class ,example furniture and fixtures, Computer equipment

 

As an Accountant/Administrator I want to register asset classes example class "ICT equipment" Type Computer equipment so as during registration one can just pick the asset type to which the asset belong, and also to associate the asset with their depriciation types.

Must have
3System generate journal entry on registering an assetAs an accountant I want the system create journal entries to the specific fixed asset account automatically on asset registration process so as to associate fixed asset in accounting reportsMust have
4Allow import and export of fixed asset dataAs an accountant I want to import a batch of fixed asset from excel sheets and export them in any format preferable excel.Must have
5Create ledger account for asset linked to each of the asset class

As an accountant/administrator I should be able to create GL account for each of the asset type so as to account for their transactions.

(Account linked to financial activity of asset registration).

Must have
6Differentiate draft asset, registered, sold or disposed asset.As an accountant I wish to track my unfinished registered asset and be able to edit them and complete their registration when I completed gathering their details, and also be able to track the disposed or sold asset this is because mostly, the asset registration process might have much details that may not be all available at one time.Should have
7Give a summary of all asset(List view) as well as the detail view of a specific assetAs an accountant I want to see a list view displaying some details of all asset available in the system as well as full details of a particular asset in its detail viewMust have
8Define depreciation methodologyAs an accountant I want to be able to add depreciation methodology( as straight line or decline balance.) of the asset class so as they will be inherited to the specific assets belong to asset class.Must have
9Define warranty period and warranty expiry date for each assetAs an accountant I should be able to record warranty expiration date for assets with warrant period.Should have

 

User interaction and design

Sketches

Fixed Asset Home Page

 

Page to Add New Asset

 

Attributes

Name

Description

Notes

General data

code*

Asset code / Asset number

Can contain a prefix of an asset name

Auto generated
Name*Name of an asset 
Description*Short description of an asset 
Serial numberThe MFI's serial number of an assete.g "Umoja/Comp/003"
Class*The class type of the asset, its a dropdown fielde.g assets like laptop, printers and desktops can be on the class "IT Devices"
Status*The status of an asset, its a dropdown filed

e.g available, disposed, broken, owned

ModelIts the model of any asset, its optionale.g HP Pavilion 500-010xt, Acer Aspire One D2015
Supplier nameThe name of the company/person where the asset was purchased 

Administrative data

Purchase price*The original purchase price of an assete.g 1,000
Currency*The currency of value amount filledThis is the currency for purchase price, current value, annual depreciation e.g USD
Invoice numberThe invoice number of the transaction of the purchase of an asset.e.g INV/2016/0012
Current value*This is the current value of an asset at the time of the registering

For new asset, the current value = purchase price

For old asset, current price = value after depreciation

Disposal dateThe date that asset was disposedUse date picker
Years of lifeIs the duration in years of a certain class to be disposed 
Depreciation startThe time when the depreciation of an asset startsUse the date picker
Depreciation endIs the date when the years of the of that assets endsThis should be calcuated automatically after filling the years of life and depreciation start
Annual depreciationIs amount of depreciation of an asset for yearEntered by a user

Location data

Branch officeThe office where an asset is residesDrop down of the MFI branches
Location Free text
UserAn employee who is using an assetEmployees dropdown
Installation date Date pick

Warranty data

Warranty codeThe code of the warranty 
Warranty start dateShould fetch the original purchase date of an asset 
Warranty end dateThe date were the warranty endsUse date picker
Warranty period"x" is the number of yearsDrop down

 

Questions

Below is a list of questions to be addressed as a result of this requirements document:

QuestionOutcome

Not Doing

Fixed Asset Maintenance

Reasons: Used mostly by non microfinance institution such as manufactures. And it may unnecessarily elevate scope of the fixed asset module in micro finance.

 

References 

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