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Which accounting standards deal with accounting for fixed assets?

Fixed assets are some of the most mismanaged company properties in the UAE. One mistake that many companies make is failing to provide clear records about their assets making it difficult for the authorities to evaluate the company and balance the fixed assets register accurately. In the UAE, the International Financial Reporting Standards (IFRS) is responsible for setting the principles used to govern company assets, including fixed assets.

Fixed assets Accounting standards in the UAE

In the UAE, there are standards used to ensure proper management of fixed assets by accounting agencies. They include:

  • Records about the acquisition, maintenance, and disposal of fixed assets

It is the responsibility of a fixed assets manager to track every stage of acquiring, maintaining, and disposing of a fixed asset. This includes the planning and budgeting process to when the asset is disposed of. The fixed Asset Manager should, therefore, occasionally assess the fixed assets value to make it easier to work out its present value should there be any need to sell it in the near future.

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  • Occasional physical verification

Many companies in the UAE lose track of their fixed assets since no one pays attention to the old stuff once new ones have been brought in. While it may not directly impact the activities or output of your company, your business will be making losses if your assets keep on disappearing. There have been cases whereby items get lost in an office and remain undiscovered, or the discovery is made when it is too late. By conducting an occasional physical verification, a fixed asset manager should be able to keep track of all fixed assets to prevent loss.

  • Review of outdated or fixed assets not being used

When a company purchases new computers, the old ones are often kept in a store and left to rot. A good fixed assets manager should be responsible for monitoring and handling such company assets. Although most of the fixed assets that are no longer in use are meant to be disposed of or donated, it is according to fixed assets standards that these assets be documented to remain trackable in one way or another. The worst that can ever happen to assets that are not being used is to get lost without any trace.

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  • Restricting some assets from moving

Some fixed company assets remain part of the company forever, maybe because they cannot be disposed of as it is customized equipment designed for a specific purpose. However, it reaches a time when these assets become less important, and as a result, get mishandled.

There are cases where employees obtain company property without any clear procedures which is detrimental to the company. What should happen under correct procedures is that the company asset should be passed on to the employee (now its custodian) and their details recorded in the company records. In some cases, tracking devices are installed in fixed assets so as not to be disposed of illegally or moved outside a given area.

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Benefits of fixed assets registrar services

One of the main reasons fixed assets management services are important is that of reducing losses through theft, fraud, or conspiracy. Additionally, it is excellent for keeping track of an assets' value since fixed assets are known to depreciate with time.

Monitoring fixed assets can also be used to indicate if an asset needs to be replaced or undergo a maintenance procedure. Therefore, it is right to say that fixed assets registrar can help you maintain the condition of your assets. In case of any repair or maintenance cost, all the information is recorded for accountability.

One of the best Accounting Firms Firms in Dubai UAE

Farahat & Co are one of the top regulated Auditors in Dubai. With decades of experience under our belt we can help you manage your fixed assets while following the IRFS rules. Our experts will gladly manage your fixed assets so that there can be no loopholes in evaluating the true value of your company.

Feel free to call us today to make an enquiry on any auditing issue or even to book an initial appointment with us.

Ervee is a CPA with international experience in Tax and Accounting. He has over 12 years of experience in accounting and bookkeeping and over a year in VAT implementation, registration, and accounting in UAE. He regularly drives out inefficiencies in company operations and loves the challenge of helping clients find additional ways for an easier and improved compliance and verification of transactions.