Introduction:
Fixed assets are long-term tangible properties, such as machinery, buildings, and equipment, that businesses use to generate income. Managing these assets effectively ensures operational stability, cost efficiency, and better financial control. Oracle has introduced significant enhancements in its Fusion Fixed Asset module to improve usability, financial reporting, and integration with other applications.
Key Transformative Features:
We can discuss some of these remarkable enhancements in detail, as listed below. These updates have significantly improved the Fusion Fixed Asset module, offering businesses greater efficiency and financial reporting capabilities.
Fixed Asset Approval:
Business requires certain governance while recording the fixed asset transactions including but not limited to addition, retirement, and transfer, to ensure the accuracy and completeness of it. The approval workflow on the fixed asset transactions also ensures the appropriate level of internal control.
The approval workflow streamlines the elimination of paperwork by acting as a centralized repository for all asset approval transactions. It ensures compliance, enhances accountability, and meticulously records audit trials.
Oracle has recently introduced approval on Fixed Asset transactions such as Addition, Adjustment, Transfer and Retirement for single and mass transactions. To enable the approval, select the required transactions such as Additions, Adjustments, Transfers and Retirements in ‘Enable Approval’ field available at the asset book level.
The system will route the fixed asset transactions for approval using rules configured in asset transactions approval spreadsheet available under manage workflow rules in spreadsheet page.
The following is the difference between Single Transaction and Mass Transaction Approval. (Source: Oracle Consolidated Document for Assets approval)
| Single Transaction | Mass Transaction |
| Each transaction is approved separately. Approver is notified for each transaction. | Transaction group as whole is approved. Approver gets only one notification for each Mass Transaction group. |
| Enter single transaction in the following pages to submit for approval.
· Add Assets · Adjust Assets · Transfer Assets · Retire Assets
To create approval rules for the single transaction use the following sheets in “Manage Workflow Rules in Spreadsheet”.
· Addition · Adjustment · Transfer · Retirement |
Enter Mass Transactions for group of assets through ADFdi Spreadsheet, or FBDI Spreadsheet and to create approval rules use the “Mass” sheet in “Manage Workflow Rules in Spreadsheet”. |
| Most of the asset attributes and transaction attributes are available to define the approval rules. | Only Mass Transaction group attributes are available to define the approval rules. Individual asset level attributes are not available. |
| Approval is initiated when you submit the transaction. | Approval is initiated when you set the status to Post for all lines in the group and post them. |
| Approval notification shows the details of the assets transactions submitted. | Approval notification shows the summary details of all the asset included. in the mass adjustment transaction group/batch. |
The business can consider below factors to decide if Fixed Asset approval should be implemented by the entity which might add the administrative cost but ensures accurate financial reporting.
| Decision Point | Explanation | Financial Impact |
| Asset Materiality and Value | Approval is necessary if the fixed asset addition, retirement, or adjustment exceeds the materiality threshold. | Ensures proper oversight for high-value transactions, preventing material misstatements in financial statements and safeguarding assets. |
| Risk of Misclassification or Errors | Implement approvals if there’s a history or high likelihood of errors in classification, depreciation, or adjustments. | Reduces the risk of misstating expenses or asset values, which could impact reported profits, tax liabilities, and investor confidence. |
| Impact on Financial Ratios | Approvals are critical if the decision significantly affects key ratios like ROA, Debt-to-Equity, or Current Ratio. | Prevents unintended consequences on financial ratios, maintaining compliance with loan covenants and supporting informed decision-making by stakeholders. |
| Regulatory and Audit Requirements | Required if compliance with standards like IFRS/GAAP or audit recommendations demands additional oversight. | Avoids penalties, audit findings, or reputational damage by ensuring adherence to regulatory and reporting standards. |
| Frequency and Volume of Changes | Approvals should be implemented if the entity frequently adds, retires, or adjusts fixed assets. | Controls prevent fraudulent activities and ensure that frequent changes don’t lead to over- or under-capitalization, safeguarding the accuracy of financial records. |
The detail of setup is available in Oracle Fusion Cloud Financials Readiness document of release 24C. (Exception-Based Approvals for Fixed Asset Transactions)
Segregation of Asset Transaction Entry and Transaction Posting Duties:
Segregating asset transaction entry and posting in Oracle Fusion enhances internal controls, reduces errors and fraud, improves data integrity, and strengthens auditability. This structured workflow boosts efficiency, transparency, and compliance with global internal control standards.
To set up this in the system, navigate to Setup and Maintenance -> Financials -> Change Feature opt in -> Fixed Assets -> Edit Feature -> Segregation of Asset Transaction Entry and Transaction Posting Duties.
The separate custom role needs to be created for the preparer by removing the posting-related privileges and for the reviewer by adding privileges related to transaction viewing after copying the ‘Asset Accounting Manager’ seeded role.
Below is a table list down the nature of transactions which can be performed by the preparer and reviewer (Source: Oracle Docs: Implementing Assets 24A)
| User Type | Duties |
| Transaction Preparer |
Note: The Submit button is disabled for the transaction preparer. |
| Transaction Reviewer |
Note: Transaction reviewers can’t create or edit transactions. |
The details of setup is available in Oracle Fusion Cloud Financials readiness under Asset and Lease Management > Assets (Oracle Fusion Cloud Financials 24A What’s New)
The separate of asset transactions and posting duties is also in line with principle of lease privilege and best practice of internal control which should aim to achieve. Business can consider below pointers to decide if entity should segregate asset transaction entry and posting duties when recording fixed assets in the books.
| Decision Point | Explanation | Financial Impact |
| Risk of Fraud or Misappropriation | Segregation is essential if there’s a risk of asset-related fraud or unauthorized postings. | Mitigates potential financial losses and improves internal control, safeguarding assets and reducing the risk of fraudulent financial reporting. |
| Complexity and Volume of Transactions | High transaction volumes or complex entries may require segregation for accuracy. | Reduces the likelihood of errors, ensuring accurate asset values, depreciation schedules, and financial statements. |
| Regulatory and Audit Requirements | Required if accounting standards (e.g., SOX, IFRS/GAAP) or auditors recommend stronger controls. | Enhances compliance with regulations, avoids penalties, and builds stakeholder confidence in the integrity of financial reporting. |
| Expertise and Accountability | Segregation ensures that specialized personnel handle entry and posting responsibilities. | Reduces errors caused by a lack of expertise, preventing misstated asset values and incorrect depreciation charges. |
| Cost of Implementation vs. Benefits | Consider whether the financial benefits of segregation (e.g., reduced errors and fraud) outweigh the costs (e.g., hiring additional personnel). | Balanced controls improve reporting accuracy and reduce costly mistakes, but excessive controls could increase operational expenses unnecessarily. |
Capitalization of Fixed Assets for Expense Destination Receipts in the Procurement Process
Capitalizing fixed assets for expense destination receipts improves financial accuracy, transparency, and compliance by ensuring timely recording of asset-related transactions. This approach enhances asset tracking, reduces manual errors, and provides a clear audit trail for regulatory and internal audits. Automating capitalization streamlines financial operations, enabling businesses to allocate resources efficiently and plan future investments effectively. Even when invoices are delayed due to vendor or internal approval issues, this method ensures that assets in use are properly recorded, preventing financial misstatements and improving overall reporting accuracy.
There are ample of cases where the entity has received the asset and started using it but the invoice for the same is not booked in the system due to variety of reasons such as delay in invoice submission by the vendor or internal delay due to approval or similar issues.
The system will also create a maintenance asset for such receipts automatically to establish a relationship with the corresponding fixed asset without any manual intervention. It will create a single fixed and maintenance asset for non-serialized items and multiple assets will be created for serialized items.
After accounting for the receipt of the asset, transfer the estimated costs and non-recoverable taxes from the receipt to Assets using the Transfer Receipts to Mass Additions process. This process transfers the assets to the corporate book associated with the purchase order’s inventory organization, using the receipt date of the goods as the in-service date. Once the invoice is created and accounted any price variance between invoice and purchase order will be posted to the Fixed Assets.
The business can consider below pointers to decide if asset can be capitalized while receiving or at invoice.
| Decision Point | At Asset Receipt | Financial Impact (At Receipt) | At Payables Invoice Creation | Financial Impact (At Invoice) |
| Ownership and Risk Transfer | Capitalize if ownership and risks are transferred upon receipt of the asset. | Increases fixed assets and liabilities simultaneously; aligns timing of capitalization with control transfer. | Capitalize when ownership is confirmed through the invoice. | Delays asset recognition, potentially underreporting assets in interim periods. |
| Cost Certainty | Estimate and capitalize based on expected costs if all relevant costs (e.g., freight, installation) are known. | Risk of estimation inaccuracies; may require future adjustments, creating complexity in reporting. | Capitalize based on the final confirmed invoice value. | Ensures accurate asset valuation and avoids retroactive adjustments. |
| Asset Readiness for Use | Capitalize if the asset is in the location and condition necessary for its intended use. | Accurately reflects asset usage timeline and depreciation commencement. | Delay capitalization until the invoice confirms readiness. | May defer asset recognition and delay depreciation start, impacting reported earnings. |
| Supplier Invoice Discrepancies | Ignore minor discrepancies and capitalize based on receipt records. | Risk of mismatched liability and asset values if invoice adjustments occur later. | Capitalize after resolving discrepancies in the invoice. | Ensures accurate recording of asset value, minimizing reconciliation challenges. |
| Materiality Threshold Compliance | Capitalize immediately if the value exceeds the business’s materiality threshold. | Aligns with policy thresholds but may result in premature recognition if costs are uncertain or incomplete. | Capitalize after invoice verification of materiality. | Avoids capitalizing items incorrectly, ensuring compliance with accounting standards like GAAP or IFRS. |
The detail of setup is available in Oracle Fusion Cloud Financials Readiness document of release 23B under Assets. (Oracle Fusion Cloud Financials 23B What’s New)
Conclusion:
In conclusion, the features outlined in this blog provide significant enhancements that will undoubtedly benefit businesses in the tracking and reporting of fixed assets. These innovations ensure greater accuracy, compliance, and efficiency, thereby facilitating more effective asset management and informed decision-making. Implementing these features will empower organizations to streamline their financial operations and achieve better transparency and control over their fixed assets.
Bhumish Padash is experienced Chartered Accountant with an exhibited history of working in Oracle Consulting and Statutory Audit. He enjoys traveling, cricket and reading apart from work.
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