Ghost assets in the public sector: how to find and fix them

Every public body that has tried to put a value on what it owns has met them. A vehicle on the register that nobody can find. Forty laptops listed against a department that was merged years ago. A generator bought for a project that closed. They are called ghost assets: assets that appear in the records but cannot be physically located or verified.

They matter because a register is a statement. If it lists assets that are not there, the financial statements overstate what the organization owns, and every figure built on the register, from depreciation to insurance, is wrong. This article is about where they come from and how to clear them in a way you can defend.

Where ghost assets come from

Hardly any are the result of a single dramatic event. They accumulate.

• Transfers that were never recorded. An asset moves to another office, or another entity, and the register still shows the old place. When that office is wound down, the asset is gone from the register’s point of view, but it was never removed.
• Disposals without paperwork. An item is sold, scrapped or given away, and nobody updates the register, or the approval was never filed.
• Duplicates. The same asset is entered twice, once from the invoice and once from a handover list, and only one of them is real.
• Mis-identification. The register describes an asset in a way that does not match what is on the floor, so a real asset cannot be linked to its record.
• Inherited records. Registers handed over between bodies at devolution, or at the end of a project, often arrive without the evidence behind them.
• Real losses. Some assets are lost, stolen or misused, and the register does not say so.

Notice that most of these are fixed by good record keeping, not by finding someone to blame.

The opposite problem

Be as careful about the reverse. Assets that exist but are not on the register are just as common after a project, a donation or a rushed procurement. They are not depreciated or insured, they are not counted, and in an audit they appear as “unrecorded” assets that someone has to explain.

A verification exercise should look for both: on the register but not found, and found but not on the register.

A way to clear them

The sequence below is the one we recommend. It is a process, not a purge.

1. Take the register as it is

Export the register as it stands, with its date, and keep a copy. This is the baseline you will reconcile from, and the version your auditors will compare against.

2. Organize it by place and by responsible person

Group assets by location and department, using one consistent list of locations. A register sorted that way is a work plan, because each area can be counted by whoever is there.

3. Count against it

Run a physical verification of each area. Scan or record each asset against its identifier, and capture anything found that is not on the list. The detail of how is in our guide to doing a physical fixed asset verification.

4. Classify every difference

Do not use one bucket called “missing”. Give each exception a status, so the actions are different and the report is meaningful:

Status	What it means	Next action
Verified	Found, and the record matches	None
Not found	On the register, not located	Investigate
Transferred	Moved, with or without paperwork	Find the evidence, correct the register
Disposed	Gone, legitimately	Record the disposal and its approval
Duplicate	The same asset entered twice	Merge or retire one record
Unrecorded	Found, but not on the register	Register it, with its source
Damaged	Found, not usable	Assess, then repair or dispose
Unidentified	Found, but cannot be matched	Tag, describe, keep for review

5. Investigate with a deadline

For each not-found item, ask the last known custodian, check the transfer and disposal files, and look where such assets collect. Keep a short note of what was done. Set a date by which each exception has either a resolution or a recommendation.

6. Resolve with approval and evidence

Decisions about writing off, disposing or adjusting should be taken by someone with the authority, with the evidence attached. Every correction to the register should be traceable to a person, a date and a reason.

7. Tag so it does not come back

Tag every asset that survived, with a durable, unique tag, and record the number against the register line. A tag turns an asset from a description into something that can be scanned, which is what makes the next count short.

8. Put controls in place

The register drifts again unless somebody owns it. A few controls do most of the work:

• no asset is issued without a tag;
• every transfer and disposal is recorded when it happens, with a reference;
• a verification date is kept on each asset, and a due date for the next one;
• one person is accountable for the register, with time to keep it.

What an exception log looks like

A log does not need to be elaborate. It needs to say, for each difference, what was found, what was done and who decided. Two illustrative entries:

Register line	Finding	Status	What was done	Decided by
Laptop, serial ending 4471, Finance	Not found in Finance. Found in Procurement, tagged and in use	Transferred	Location and custodian corrected, transfer memo attached	Assets officer
Photocopier, Admin block	Not found. Disposal letter located in the store file, dated two years earlier	Disposed	Disposal recorded with the approval attached	Head of department

Entries like these are what turn a list of “missing” assets into a reconciled register, and they are what an auditor can follow without asking you to explain from memory.

If you cannot reach a conclusion for an asset, say so. “Not found after search of stores, last custodian and transfer files; recommended for write-off, pending approval” is an honest record, and a far better one than a guess.

What auditors look for

You will be asked for evidence more often than for apologies. A defensible position has:

• a register dated before the exercise, and after;
• the count records, showing what was found and where;
• the list of exceptions, with a status for each;
• the approvals for every write-off and disposal;
• the controls you put in place.

Tagging helps, but it does not by itself resolve an audit finding. What resolves it is a reconciled register with the evidence behind each change.

Where software helps

A spreadsheet can hold the list. What it does badly is the part that makes this tractable: the count, the matching and the trail. VexCloud AMS takes the register, loads the expected assets for each area, and shows what was found, what was not and what turned up somewhere else as you scan. Corrections are made in bulk and logged against the audit, and the finished audit is frozen with a hash, so the record you show the auditors is the record that was made.

If your register has not been verified for years, start with one department. A finished count of a hundred assets teaches you how your organization loses track of things, and that is what you need to fix the other thousand.