Tools and low-value items: fixed assets or stock?

A power drill is not expensive and a hard hat is worth even less, but over a year the power tools, gloves and hard hats lost at one site often add up to a sizeable sum. Low value means loose control, and loose control means things go missing. Whether such items are fixed assets or stock is a question for finance. How to stop them quietly disappearing is a question for the warehouse. Keep the two questions apart.

Separate the two questions

• Booking basis: are these tools fixed assets, low-value consumables or a direct expense? That depends on the company's accounting policy and value threshold, so follow your chief accountant or tax adviser, and do not decide it in the warehouse.
• Control boundary: however they are booked, which items must have an owner, a record and a traceable destination? This is a management decision and can be wider than the booking boundary.

For example, a power tool of fairly high unit price should have a number and an issue record even if it never enters the fixed asset register, while a pair of cheap gloves only needs to be issued by person and counted by quantity.

Many companies mix the two up: if finance does not put an item in the fixed asset register, the warehouse assumes it need not be managed. The result is no record in the books and no control on site, and the item has no owner.

What to bring inside the control boundary

Draw the line along these lines and agree the thresholds with finance and the project manager:

• Tools with serial numbers and a higher unit price, such as drills, cutters, welders and measuring instruments, are registered one by one.
• Small items of modest price that are easy to take away, such as tape measures, spanner sets and radios, are registered by number or by set.
• High-volume, low-price consumables such as gloves, masks and hard hats are issued per person and registered by quantity, without numbering each one.
• Items with safety requirements, such as harnesses and welding masks, are registered together with their inspection dates.

How to keep an issue register

Create a simple issue register and write down every loan and return:

1. item name and number;
2. the borrower's name, crew or project;
3. date out and expected return date;
4. condition when issued, and any damage;
5. the borrower's signature;
6. return date, condition on return and the receiver's signature.

A quick photograph when a tool goes out is no trouble, and is the plainest evidence if damage is disputed later. Fix the number to the tool itself, using colour-coded tape, a paint-pen number or a metal tag, so that a tool can be identified even when it has left the tool store. The register goes by number, not by name, because there may be ten "drills".

Spend ten minutes before the end of the shift having the crew leader return tools to the store while the storekeeper counts them in front of him. Asking about a missing tool on the spot is much easier than tracing it the next day.

Regular checks

Low-value items also need counting. Once a month, count piece by piece against the register: items in store, items on loan and items awaiting disposal should add up to the registered total.

An invented example: the tool store register lists 46 tools. At the monthly count, 41 are in store, 3 are recorded as on loan and 2 are neither in the store nor recorded as lent. 41 + 3 + 2 = 46. (The figures are invented.) The 2 become the items to trace within 30 days, and you also check whether someone took them without signing. For the 3 on loan, check whether the loan period is reasonable and whether any are overdue. Report the result to the project manager each month. Several months without a loss show the control is working.

Consumables are checked differently. For 200 hard hats issued one per person with the borrower recorded, check at month end whether issues plus stock equal total purchases. If the gap is large, find out whether the cause is loss, damage or double issue.

In short

Low value does not mean no control. UzWarehouse's fixed asset counts register equipment, vehicles and office assets one by one, tag them with barcodes, photograph them and match them to the register, to help you find missing, idle and unrecorded items. Please confirm the booking basis with your finance team.