Fixed assets are critical to the operations of any business, and telecom companies are no exception. The Companies (Auditor's Report) Order, 2020 (CARO) requires companies to disclose fixed asset details, such as the description, quantity, location, and book value. The accuracy and completeness of fixed asset records are crucial for regulatory compliance and financial reporting. CARO also requires auditors to comment on the physical verification of fixed assets and any discrepancies found during the verification process. It is, therefore, essential to efficiently track and manage fixed assets to help reduce costs, optimise resource utilisation, increase profitability and ensure accurate reporting and compliance with regulatory requirements.
The telecom company is a leading provider of mobile and internet services in India, with a presence in almost all states and union territories. The company has a vast network of cell towers, fibre optic cables, and data centres strategically located to provide seamless connectivity to its customers. In addition, it has invested heavily in building a robust infrastructure to support its various services, including mobile voice and data, fixed-line broadband and voice, and digital TV services.It is a global communications solutions provider with over ~500 Mn customers in ~15 countries across South Asia and Africa.
The telecom company was facing challenges in tracking its fixed assets due to the following reasons:
Lack of a systematic approach to asset management
Inaccurate and incomplete asset records
Lack of trained staff for asset management
Inefficient location tracking and identification of assets during physical verification
To address these challenges, the company generally completes the physical verification process over a period of three years. Threstrict the scope of the assignment to one-third of the value of the assets in a year. our team of experts at Chandra Wadhwa & Co. to provide physical verification of fixed assets services for Kerala and Tamil Nadu-Chennai circles. The service included the following steps:
Assets Location Tracking: We were given a site list or location details for the respective circle by the company, which needed to be physically verified. The extract of the location list is given below. The task involved visiting approximately ~35,000 sites across two circles. To complete the assignment within three months, we adopted a multi-pronged approach involving three key steps as follows:
Deployed two teams comprising 50 members in each circle.
Allocated 40% of our in-house team to visit the field and ensure that the quality of services at different locations across India is over and above the market benchmarks.
Established a structured asset-tracking approach to conduct physical verification and update asset records on a real-time basis.
Assets Tagging: We tagged each asset with a unique identifier and collected information on its make, model, and serial number to embed uniqueness into the tracking process for future use. An illustrative barcode tag format is as below:
Checklist Finalization: The checklist was jointly finalised by Chandra Wadhwa & Co. and the company. The checklist generally consists of only a list of parent assets; child assets are not physically verified. The company provides the assets' BOM (Bill-of-Material), based on which the quantity of child assets against each parent asset is identified. An illustrative list of company- owned Mobile site assets is as follows:
Physical Verification: We held several kick-off meetings with the circle heads and appointed SPOCs (single point of contact) to ensure better coordination and effective field activity. During the physical verification process, our team used mobile apps and Google forms to accurately track and identify all the fixed assets, including cell towers, equipment, vehicles, and office infrastructure.
Sign-Off: Once the field activity in a zone/cluster of a circle was completed, we would obtain a signed document/checklist from the Zonal Territory Manager (ZTM)/cluster in charge. This validated that the asset verification process was executed under their supervision and ensured the accuracy of the results.
Asset Reconciliation: Once the physical verification was complete, we cross-checked the asset records (~20 Mn. in numbers) with the actual assets on the ground. During the verification process, we identified discrepancies and accordingly updated the asset records by revising asset descriptions and locations, as well as determining which assets were in-scope and out-of-scope. We calculated the impact on the company's profit and loss (P/L) by comparing the unreconciled values between the fixed asset register and the physically verified assets on a first-in, first-out (FIFO) basis. For this purpose, we considered the net book value in the asset register.
After implementing our physical verification of fixed assets service, the telecom company achieved the following results:
Accurate Asset Tracking
Outsourcing the physical verification activity resulted in cost savings of ~50% as compared to conducting the activity in-house
Improved Resource Utilization
Enhanced Regulatory Compliances
FREQUENTLY ASKED QUESTIONS:
What is the article about?
The article is about a telecom company that leveraged expert services for accurate asset tracking.
Why is accurate asset tracking important for telecom companies?
Accurate asset tracking is important for telecom companies as it enables them to track their assets and optimise their asset utilisation, reduce asset downtime, and minimise asset loss or theft risks.
What challenges do telecom companies face in accurate asset tracking?
Telecom companies face several challenges in accurate asset tracking, such as the lack of a centralised asset management system, the use of multiple systems for tracking assets, the inability to track assets in real time, and the lack of visibility into asset location and status.
How can expert services help telecom companies with accurate asset tracking?
Expert services can help telecom companies with accurate asset tracking by providing them with a centralised asset management system, integrating multiple tracking systems into a single platform, providing real-time tracking and monitoring of assets, and enabling them to gain visibility into asset location and status.
What benefits can telecom companies gain from accurate asset tracking?
Telecom companies can gain several benefits from accurate asset tracking, such as improved asset utilisation, reduced asset downtime, increased operational efficiency, reduced risks of asset loss or theft, and improved regulatory compliance.
How did the telecom company in the article benefit from expert services for accurate asset tracking?
The telecom company in the article benefited from expert services for accurate asset tracking by gaining visibility into its asset inventory, tracking and managing its assets in real-time, reducing asset downtime, and improving its operational efficiency.
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Partner, Chandra Wadhwa & Co. (Cost Accountants) | B.Com, FCMA, ACA, DISA | Certified SAP-CO Consultant | Executive Program on Management and Finance (IIM, Ahmedabad)
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