A Practical Guide to Compliance in Asset Management

In the world of asset management, compliance is very important. It can range from simple policies set at your business to full-on laws enforced by government agencies, with penalties that range from a slap on the wrist to substantial fines.

Subsequently, understanding asset management compliance is vital for business owners that don’t want to suffer the consequences of non-compliance, particularly with the cost of asset management already being so high.

In this guide, you’ll learn about the types, examples, and challenges of asset management compliance, so you can make a comprehensive plan for your business in the long run.

What Is Asset Management Compliance?

Asset management compliance describes the state of a business adhering to laws, policies, and regulations surrounding the ownership of specific assets set by the governing body of the state or country it’s based in for their industry.

That last part is important, as compliance can look very different for different businesses in different locations. Retail assets in Portland, Oregon, for example, will have very different compliance requirements than construction assets in Portland, Maine.

Check out our guide to fixed assets to learn more

In this guide:

• What Is Asset Management Compliance?
• Why Is Compliance in Asset Management Important?
• Types of Asset Management Compliance
• Challenges of Asset Management Compliance
• How to Ensure Your Asset Management Is Compliant
• Compliance in Asset Management: Next Steps

Why Is Compliance in Asset Management Important?

Being compliant is vital when it comes to asset management, which is why every company should make it a key priority in building a business that achieves strong ROI for assets it holds.

For one, being compliant ensures that your company is up to modern business standards for asset management. It can be easy to get stuck in your ways, and these compliance requirements force you to stay informed.

Unfortunately, part of the way the force you to stay informed is by putting steep penalties when you aren’t compliant. Government organizations will typically audit your business for compliance, and if you are found in violation, you could be subject to hefty fines and even legal trouble.

It may seem tedious and even unfair, but the reality is that there can be a lot of issues around asset management that could negatively impact your business if left entirely unchecked. Asset misappropriation is a common one, which on average costs business around $120,000 per instance, but generally speaking, compliance requirements are a good thing for the average business.

Types of Asset Management Compliance with Examples

When it comes to asset management, there is a couple of a different types to understand. In fact, there are two types of asset management, and we’ll explain each of them below.

Internal compliance

Internal compliance describes the type of compliance that is set by your company, rather than a third-party organization. Some examples of internal compliance include:

• Asset quality protocols – The process of checking the quality of your assets on a regular basis.
• Security policy – The protocol in place for keeping assets and data related to assets and employees secure.
• Social media policy for employees – Ensuring employees aren’t hurting your brand reputation by posting on social media.

This kind of compliance is typically focused on quality control, ensuring that the asset or service your business owns and operates continues to perform efficiently.

Check out our guide to asset management KPIs for more information

External compliance

External compliance is the type of compliance that is set by regulatory bodies like government agencies who will perform audits to check whether or not your company is compliant.

• Employee safety protections – Organizations like OSHA (Occupational Safety and Hazard Administration) do audits to ensure that employee safety and health is a priority for all kinds of businesses.
• Bookkeeping requirements – The Internal Revenue Service (IRS) is an organization that requires businesses to keep in depth accounting records of assets to keep taxes above board.
• Data security measures – The Department of Labor Privacy Program (DLPP) has regulations in place that require businesses to keep employee and customer data secure.

This kind of compliance is focused on adhering to laws and regulations set by those organizations, maintaining a level of legality that will help you avoid penalties and fees from non-compliance found during audits.

Challenges of Asset Management Compliance

When it comes to asset management compliance, you really want to get it right. Unfortunately, there are a lot of obstacles in the way that could prevent you from being compliant. Here are some of the challenges of asset management compliance to look out for at your business.

Constantly changing regulations

The biggest problem with trying to stay compliant is that compliance changes on pretty much a yearly basis. Because it’s based on laws and regulations that are subject to debate and even voting, they are often amending, rescinded, or plain thrown out, so you have to start from scratch.

Staying up to date on the changing landscape of asset compliance for your industry is a hard but necessary reality for businesses, and it’s worth investing in if you don’t want to get hit with a steep penalty for falling behind.

Quickly evolving technology

In 2024, the technology in the business world is getting out of control. And with every piece of new technology is a new form of compliance you must adhere to, which can be hard to keep track of with everything else going on.

Even worse, this technology is expensive, not only increasing the cost of asset management, but also increasing the cost of staying compliant within the asset management industry.

Poor data collection

One of the easiest ways to stay compliant is to be aware of the status of your assets, and the best way to do that is to have plenty of data to go off of. Unfortunately, data collection on your assets can be hard, with some systems not being entirely up to the task.

Whether you’re doing it yourself with simple asset management spreadsheets or shelling out for a full-on software can help, you’ll need some kind of tool to help you with asset management data collection. They will streamline a wide range of processes, provide custom reports, and generally improve the asset management system at your business, keeping you compliant in the long run.

How to Ensure Your Asset Management Is Compliant

Now that you know about all the examples, challenges, and types of asset management compliance, it’s time to take matters into your own hands. Here are a few steps you can take to ensure that your asset management is compliant at your business.

• Regularly monitor assets – You have to keep track of your assets for compliance on a consistent basis, and regular quality checks are vital in that step.
• Hire a compliance officer – If you’re in a particularly regulated industry or state, you might consider onboarding someone who’s sole job it is to make sure that you’re compliant.
• Automate data collection – Data collection is too important in compliance to leave it up to human error, which is why you need a good system for getting you accurate, efficient data.
• Have a plan for non-compliance – You don’t want to be non-compliant, but having a plan for if it happens will ensure that you act quickly and proactively to right the wrong in question.

In a lot of cases, the best asset management software can help you achieve the majority of these goals. Depending on the platform, you can get simple automated features and in-depth compliance checks that allow you to get ahead of the problem before an audit comes down the pipe.

Compliance in Asset Management: Next Steps