Asset Management – Entry 1

The term asset management is used to represent a system of internal controls designed to safeguard and track the property of an organization. Most organizations have a policy to capitalize only those assets which cost more than a specified amount and expense all equipment whose value is below the threshold limit.

Similarly, fixed assets which have a useful life of less than one year are not capitalized. Policies pertaining to acquisition, use and disposition of “capitalized” fixed assets form the nucleus of an asset management system.

However, not all assets are capitalized. Tracking non-capitalized assets that are critical to operational initiatives is equally as important as tracking capitalized assets. For example companies rely heavily on computing. As the cost of computing continues to fall, many devices, such as laptops, represent an expense to the organization and are not capitalized.

Given their importance to the organization, tracking them is worthwhile. Furthermore planning for future purchases and for contingency purposes necessitates reliable records. Therefore asset management should address both capital and non-capitalized assets.

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