Are we using fixed assets fully?
Slow-moving bureaucratic procedures or mediocre tracking of fixed assets will inflate the capital budget. How? Say a company is slow to compile information about computers that it is disconnecting and relocating. Because these appear slowly on the excess capacity list, managers will buy new computers to meet their needs; even though the company’s current computer assets make the purchases unnecessary. Recommendation: In this situation, controllers may have to visit their company’s paper trails—not just its extra capacity lists—to see if fixed assets are tracked and recycled, avoiding needless capital spending.
