Fixed Asset Management Best PracticesPresentation Transcript
Asset Management: Best Practices for Small & Mid-sized Businesses December 6, 2007
Understand the impact fixed assets have on a company’s financial statement
See how utilizing the integration of Red Moon Solutions’ Fixed Assets Manager (FAM) with SAP Business One can help you achieve maximum accounting benefits
Review FAM’s intuitive interface and comprehensive tax calculations, which ensure a company is compliant with all IRS rules and regulations
Learn best practices used by other companies in tackling asset management
Who is Red Moon Solutions?
Fixed Assets Manager™ (FAM)
Supported Andersen’s internal U.S. tax practice
SAP Business One Certified Solution Partner
Like-Kind Exchange Matching™ (LKEM)
WorldPro™ Expatriate Solutions
PowerOLAP ™ - Tax Department Business Intelligence Solutions
eTaxCalendar ™ - web-based tax calendar
eTaxPortal ™ - SaaS collaboration workspace, including workflow and document management
Implementation & Integration
Founded by Jim Shedivy
Andersen Partner in charge of Tax Technology Enterprises
Ex-Andersen employees with minimum experience of 6 years
Incorrect information and errors in fixed asset inventory data are a near universal problem – resulting in significant and unnecessary tax overpayments of 8% to 20% Asset Management Resource (AMR)
What are small businesses saying? “ We can’t get the fixed asset information we need from our accounting system.” “ I spend too much time trying to keep track of fixed asset data and calculations in Excel.” “ Were there asset dispositions we didn’t know about?” “ It takes too long to provide required information to the different stakeholders.” “ We do not know where our fixed assets are located.”
Asset Management Challenges
Lack of controls and validation in Excel
Complicated calculations & formulas must be created
Lack of change control
Difficulty tracking asset transactions
Poor asset data management
Missing asset locations, cost centers
Different acquisition vs. in-service dates
Impact on Financial Statements
Incorrect profit & income tax
Continued depreciation on books for disposed assets
Incorrect property tax
Unrecorded asset detail for classifying property
Incorrect insurance costs and inadequate coverage
Paying for disposed assets
Missing new purchases
Poor purchasing decisions
Duplicate assets acquired
Poor SOX compliance
Inadequate controls and processes
Financial Example Number of Assets 1,000 Average Cost per Asset $500 Total Original Cost of Fixed Assets $500,000 Total Cost of Assets Lost or Unaccounted For $75,000 15% of total cost Assumed Corporate Tax Rate 35% Estimated Federal Income Tax Overpayment $13,125 37,500 X 35% Potential Property Tax Overpayment $2,250 3% of asset cost Potential Insurance Overpayment $750 $1 per $1,000 rate Total Loss Per Year $16,125
Overstated adjustments, deductions, exemptions and credits compromise up to $30 billion per year in unpaid taxes, according to IRS estimates. -IRS FS-2006-27 November 2006
Demonstration: SAP® Business One & Fixed Assets Manager
1. Order is placed in Business One with one or more items flagged as fixed assets 2. Order Arrives. Now there is an account payable for the fixed asset 3. The fixed asset must also be recognized and tracked in FAM 4. Track depreciation over time. As time passes, FAM generates Journal entries for depreciation of fixed assets which are posted to the General Ledger FAM Fixed Asset 1 FAM Fixed Asset 1
What are the key issues?
Tracking disposals and transfers
Properly classifying assets
Who owns the process?
Fixed Asset custodian
Who is committed and willing to do the work required to improve the process?
What training and education is in place to support them?
Evaluate your current state
How are fixed assets recorded today?
How are dispositions and transfers tracked?
What are the standard or unique asset events that provide the most risk of failure?
What processes and procedures are in place to ensure regulatory compliance?
Model your future state
What can be done better?
Tracking assets by location
How can risk be minimized?
What don’t we have today that would make it easier?
Do you have the infrastructure to support the solution?
What solution is right to address your issues?
Asset depreciation for book & tax
Robust search and ad-hoc reporting capabilities
Ability to generate fileable tax forms
Simple data conversion techniques for existing assets
Ability to slice and dice your data for analysis
Ability to get your data out easily to provide reports to stakeholders and/or to respond to audit
Can the solution be easily deployed and maintained?
Managing Fixed Assets for Maximum Bottom-line Impact Strategic Activities Compliance Activities MANAGE ASSET LIFECYCLE Time Spent on: HIGH VALUE ASSET MANAGEMENT LIMIT AUDIT EXPOSURE STREAMLINE COMPLIANCE REDUCE COSTS ENABLE STRATEGIC PLANNING
65% of fixed asset data is incomplete, inaccurate or altogether missing, a potential disclosure risk for executives now responsible for certifying the accuracy of financial data as a result of Sarbanes-Oxley compliance. - Asset Management Resource (AMR)
What Are Next Steps?
Select champion or process improvement owner
Take time to review current state
Analyze requirements, goals and objectives
Create ROI and/or business case
Secure budget and implement sooner rather than later!!!!!
Thank you for joining us today. If you have additional questions or for more information, contact us at: (941)379-7106 www.redmoonsolutions.com