In the wake of the recession, the topic of fixed asset management has become increasingly important. When an organization has a good handle on its fixed assets, meaning it is able to do a good job of tracking, managing, and accounting for depreciation, it not only avoids errors on its financial statements, but it avoids paying the IRS too much or too little.

Maximizing tax savings through accurate depreciation deductions is an easy way CFOs can ensure a finance organization is doing everything it can to manage costs and protect the bottom line. For example, an inaccurate fixed asset valuation may result in insurance rates that are too high. Even worse is paying taxes and insurance on “ghost assets,” an asset that is listed in inventory logs, but actually no longer exists because it has been physically transferred to another location, disposed of, or sold. An accurate inventory log also prevents purchases of redundant assets. A process for managing and accurately calculating an organization’s fixed assets must be well-designed, effective, and measurable. An organization should regularly measure how much is spent on fixed asset management, how well the organization is doing it, the error rate, and how an organization is controlling quality using the process. As well, a sound fixed asset management system that allows people access to key planning data easily can integrate information from inventory systems into an organization’s accounting system, thus preventing a communication disconnect. A fixed asset management system should also easily and automatically integrate with other systems such as your tax system. Stop using yesterday’s tools and approaches to manage fixed assets. Look at the whole picture. This includes looking at the people involved, the time it takes to track and account for fixed assets, the cost involved, and the quality of the decision making that rests on the information and analysis provided. An organization that doesn’t do a good job of this very meat and potato financial management is one that raises a lot of eyebrows. Investors want to see that you can get the basics right. For more on fixed asset management, see Mary Driscoll’s presentation Take a Smart Approach to Fixed Asset Management.