As an accountant once said “nobody volunteers to manage fixed asset depreciation”. It’s a time consuming compliance task that’s not seen as a rewarding one. But it’s full of pitfalls and risks.
Depending upon the size of the organisation, the work can be done by a qualified bookkeeper, an in-house accountant or an unqualified clerk. Or it can be outsourced – to an accountant, a tax expert or an auditor. Outside of the very largest businesses, there is no single job description for the role of managing fixed asset depreciation.
Organisations have to digest a huge range of accounting conventions and tax rules when considering how to best depreciate their assets. And, as seen in responses to COVID-19 around the world, governments regularly change the rules associated with asset depreciation for economic and political reasons. This means there is a requirement to be up to date not just year after year but also within periods when government policy can change with very little notice.
And, of course, the more assets you have and the more complex your operations, the greater the risk of errors and falling foul of tax laws.
Despite these pitfalls, many businesses, both large and small, use spreadsheets to manage their fixed asset depreciation. This means that, apart from spreadsheet formulas, there is almost no automation. As has been the case for decades, most of the depreciation work is done manually.
Fixed asset depreciation is ripe for a technology-driven change to make the task easier and more risk-free. But it’s not just the process of calculating depreciation that’s changing, it’s the whole nature of fixed asset management itself.
Artificial intelligence, data mining, real-time geolocation of assets using GPS navigation systems and other technological innovations are about to radically overhaul how fixed assets are managed and depreciated. This new world of asset management is almost unrecognisable from the way assets are managed and depreciated now.
AssetAccountant™ Australia/ New Zealand
Phone: (+61) 1300 984 378
Now that AssetAccountant is in our app store, our customers and sales team have a cloud option for fixed asset depreciation which has a strong integration with QuickBooks Online.
Matt Pisarski - Global Business Development, Intuit Quickbooks