1.  Climate Control – a data center’s performance depends on the right environmental climate.  The premium data centers have a continuous circulation of cool, perfectly conditioned air to provide the ideal environment for servers, routers and other equipment.

2.  Fire Detection and Suppression – confirm that preventative measures are the first line of defense against fires.  Air quality should be monitored by devices installed above and below the floor.

3.  Power Backup – electrical power is fed to a data center’s Uninterrupted Power System.  This provides clean power to all equipment in the rare event of a power failure.  For extended power outages, data centers can run on power generators for additional backup.

4.  Network Bandwidth – look for high speed Internet connectivity over a world-class TCP/IP network.

Furthermore, a hosted model provides access to the system from any location, allowing members of the finance team to run reports, analyze asset information and check depreciation at any time, further boosting productivity.

A hosted infrastructure managed by your software provider and its hosting partner will reside within a data center facility.  This facility should provide a high performance, high reliability, managed Internet platform for your Internet-delivered solution.  Most reputable data centers will include physical security, managed data backup services and various administrative services.

In contrast, the option to leverage a highly secure, hosted, third party solution that can be delivered within days, rather than months, is compelling.  Indeed, a hosted fixed asset register offers a raft of additional benefits.

In this blog series, we will explore the long term benefits of a hosted fixed asset register.

Composing reports and forecasts can be a lengthy, arduous and costly process that is often subject to human error if conducted by hand.  Bad reporting can affect organizations by:

• Misinforming management of information that is critical to business decisions
• Causing non-adherence with compliance issues, resulting in the consequences mentioned above

In order to avoid unreliable reports for your fixed assets, it is best to use a reporting tool in a specialist fixed asset system.  Typical reports available in specialist systems that will help your organization include:

• A fixed asset balance sheet.  This report consolidates starting points and ending points of the month and shows all of the month’s activities.
• Events.  The reports shows all transfers, disposals, relifes, and revaluations that have occurred in the given time period.
• Audit history.

Corporate tax regulations implemented by the IRS and the U.S. Department of the Treasury are constantly requiring enhanced levels of accountability from finance executives.  Various tax forms can be difficult to manage and complete.

You may experience problems with different regulations for the various states your organization may conduct business in or have the inability to regularly review US tax rules nationwide and regularly update your practices to accommodate the changes.

If your organization does not properly adhere to compliance issues you may:

• Get audited by the IRS
• Affect your earnings statements and stock prices if your company is public
• Be subject to forfeiture of grant money or tax exemptions

A specialist fixed asset management system can calculate depreciation for federal and multi-state tax books, incorporating individual regulations for each of the 50 states.  With software, users also have the option of making closing periods for internal books separate from federal books, allowing organizations to maintain the integrity of asset data for internal auditing purposes and still perform corporate tax calculations at the end of each tax year. 

Instant access to a comprehensive audit trail can significantly reduce financial reporting errors and provide further control over general accounting activities.

There are two ways in which unauthorized changes can occur and cause problems.  The first is unauthorized access to the system and the second is not having the correct procedure in place for changes to asset events.

Security of data is critical to compliance for corporate governance regulations including Sarbanes-Oxley, IFRS, IAS and GAAP. In order to avoid unauthorized changes occurring in your organization’s fixed asset register, security should be defined at user level to ensure that confidential information can be viewed only by those who need to see it.  Individual or group access rights should be designated according to an organization’s specific requirements.  This cannot take place with spreadsheets so a specialist system is essential for this security.

A well planned transfer and disposal process plays a key role in effective asset management.   An automated procedure that allows multi-user approval can help streamline processes and afford time and costs savings while ensuring the accuracy and accountability of the asset register.  Using a specialist system with event request authorization functionality allows users to create a transfer or disposal request which is then sent to a pre-determined supervisor for approval, thereby allowing organizations to ensure all changes made to the asset register are authorized.

The credibility of an organization’s data (the existence of assets and its Net Book Values) will be in question if it cannot be verified.

Verifying what an organization owns and the whereabouts is essential for credibility and complying with US GAAP and SOX.  A physical audit is also an effective asset management procedure that can help ensure assets are insured at the correct level, maintenance is accurately budgeted for and unexpected ‘write-offs’ are avoided.

Physical audits are essential to clean up the variances between what is being financially accounted for on the asset register and what is actually present.  The potential risks of not conducting a physical audit include:

• Inaccurate physical verification of assets can render the asset register unreliable
• Depreciation could be allocated to the wrong company/cost center/department/division
• Depreciation could be misstated resulting in over or under payment of taxes
• Missing assets (potential theft problem) could go undetected
• The audit trail of transferred assets can be lost
• Assets could be under or over insured
• Exposure to accounting audit write-up

An organization can avoid these risks by implementing formal physical audit policies and procedures along with a supported asset tracking system which will help control and manage the fixed asset register.  Barcode tracking technology can help reduce the time and money spent managing assets, making proper physical audits quick and simple to carry out.

Nearly all spreadsheets contain errors, which is to be expected with information entered without effective controls.  Whether it is because of incorrect background asset data or a wrong formula, there’s little doubt that information you pull from the spreadsheet, such as depreciation calculations, is likely to be inaccurate.  Spreadsheets allow for several different types of errors to occur, thereby making it difficult to ensure precision.  Additionally, several people within one accounting department will often access, manage and edit the same spreadsheet, which can compound the likelihood of errors. 

Not only does access by more than one person cause potential for additional errors, but it also removes the ability to maintain an audit trail and overall security.  With spreadsheets, you are unable to track actions made by users.  Besides the probability of being error prone and lacking security, spreadsheets are also:

• Unable to accommodate ‘parent/child’ relationships, making it difficult to accurately track and manage these important hierarchical dependencies. 
• Ineffective in meeting historical reporting and forecasting environments, because of the complexity required by these reports and the inability to rely on the data.
• Unable to export information directly into government forms, requiring them to be filled out manually and risking incorrect transcription.

A specialist fixed asset system can eliminate many of the errors that the use of spreadsheets causes.  For example, depreciation formulas and asset lives can be defaulted for each book, based on any defined asset category, which will help remove depreciation errors.  Processing depreciation in a specialist system, rather than spreadsheets, is faster and easier.  It can be completed with just one click of a button.  A specialist system will also provide the structure to link ‘parent/child’ assets, set up security for all users, and offer the ability to run standard and customizable reports.

1. Using Spreadsheets
2. Not completing a proper physical audit
3. Unauthorized changes are occurring
4. Non adherence to compliance issues
5. Poor reporting or lack of reporting

Don’t disregard the importance of fixed asset management.  Each of the five failures above can cause costly and sometimes legal penalties.  The best way to avoid failing is to implement a specialist fixed asset management system and standard processes and procedures for your organization to follow.  With the proper rules and tools, fixed asset management can be fast and simple.  Be sure to check back over the next few weeks for more information about each of the 5 failures of fixed asset management. 

With the uncertain economic outlook, senior managers can be prone to rewriting investment strategies and business plans while under pressure to make rapid changes. There are, of course, huge risks associated with such decisions – from escalating maintenance costs to business damaging equipment downtime.

Irrespective of financial conditions, organizations cannot risk making hasty changes to capital investment strategies.  It is the use of BI to pull together information from fixed asset registers, maintenance systems and finance that will deliver the trusted, real time information required to identify opportunities for asset savings and, critically, predict the risk/reward associated with reining in investment today.

All this information ie: location and condition is then logged by the engineer into a system for reference which could be a manual entry system such as an Excel spreadsheet, which is not only time-consuming but potentially inaccurate, due to human errors which can occur with different people logging into the one system repeatedly, making room for no control over mistakes or changes occurring.

Consequently, many organizations are looking to invest in a software product that makes significant improvements within their day-to-day equipment maintenance and reporting.  Utilizing maintenance management software enables organizations to improve performance levels, by allowing the workforce to update, check and amend necessary maintenance within the organization.  Additional benefits associated with maintenance management software are the reporting features available to its users, like maintenance plans, showing maintenance history and scheduled works, overdue work orders, parts used/required, quantities, dates, meter readings and labor costs. 

To find out more about benefiting from a CMMS, read how Monckton Coke and Chemical Company (MCCC)  changed once it installed one.

Fixed asset accounting software can make calculating depreciation both quick and easy without requiring the users to add any formulas.  Depreciation methods should be preloaded in your software, allowing you to easily set depreciation methods for assets and for asset lives to be defaulted for each book based on any defined asset category.  A specialist system will also let users forecast depreciation as far into the future as desired and can recalculate the current period’s depreciation to reflect updates in the asset register. 

 By completing your depreciation in a specialist system with pre-set formulas you avoid the risk of incorrectly entering formulas and the risks associated with having spreadsheets that can be accessed by multiple people without a clear audit trail.

Some are finding the answer to be a third party hosted solution, which allows for compliance critical upgrades to be delivered within days rather than months.    A hosted solution can be set up to ensure automated upgrades, which will mean your software will always be up to date – a key consideration for compliance requirements, particularly in relation to the latest IFRS and SORP regulations affecting organizations.   

If your IT department is overburdened and unable to meet your needs, a hosted solution may be the answer.  It will allow you to complete your job and it also removes some of the pressure from your IT staff, freeing them to work on other issues.

• Concerns about accurately meeting corporate governance requirements
• Inaccurate depreciation calculations
• Lack of audit trail and overall security
• Inability to link ‘parent/child’ assets or conduct asset splits, batch disposals, etc
• Unable to meet historical reporting and forecasting requirements
• Wasted time on tedious tasks such as data entry
• Lack of confidence in data integrity

Organizations need to address the above issues in order to properly manage their fixed assets and therefore these factors often become key drivers for implementing a new solution, such as a specialist fixed asset management system.

1.  Manage all documents associated with assets, inventory items, leases and capital projects such as your purchase orders, invoices, contracts and asset/inventory images
2. Allow multiple users to access documents simultaneously.  This will eliminate the need for multiple hard copies.
3. Let you browse all documents or search by document type, author and/or date of attachment
4. Permit you to upload an unlimited number of documents.
5. Help you reduce auditing costs with quick and easy document retrieval.

 If you implement a system that has the five features above, you should find that you’ll experience significant time savings and your document management will be incredibly simple.

• What are the hours of operation?
• How quickly are calls/emails answered?
• Are calls/emails tracked or logged?
• Does the supplier offer a Service Level Agreement?

 Technical support is a fundamental aspect of the total package of your software purchase, so you want to make sure you are confident with the level and quality of support to which you will have access.

• Patch and upgrade administration
• Performance administration
• Data integrity and security
• Capacity planning and sizing
• Routine scheduled maintenance

Most reputable data centers will include some of these various administrative services in addition to the physical security and managed data backup services they provide.

First, calculate the time/money you spend on fixed asset accounting.  This should includes all duties involved in the process such as:

• Data entry and verification
• Report generation
• Accounting events entries
• Monthly and yearly book closings
• Journal postings
• Conducting physical inventories

 Second, subtract the costs associated with your current fixed asset management procedures from actual costs associated with purchasing a fixed asset management software system.   When calculating costs, be sure to include all costs involved and not just those associated with the actual software.  You should consider:

• Salaries and benefits of employees involved in the project (daily or hourly, depending on the project scope)
• Employee overhead, ie: supplies and equipment
• Direct costs
• Lost opportunities

 For more about Calculating the ROI for your Fixed Asset Management Software Purchase, request our free whitepaper here.

With the use of barcodes and a scanner there is a confirmed electronic trail of items that have been found.  The information from the audit can be synchronized back to the asset register with the complete audit trail in real time.  

And with the advances in labels available, you don’t have to be concerned about the sustainability of labels, as they can now be made in vinyl, white polyester, ultra shield with high resistance to UV exposure, and metal in addition to other materials.   So you can apply labels that can withstand the same wear and tear as your fixed assets.

 Depreciation calculations can be wrong if the background asset data or the formula itself is incorrectly entered.  If you have several people within one accounting department accessing, managing and editing your data in the same spreadsheet, you are making the records more susceptible to errors. 

 To avoid error-prone spreadsheets, consider implementing a more secure system.  If you stick with spreadsheets, you will need to have set rules for accessing, editing and reviewing the system.  However, another more secure option is to consider a fixed asset management system, which will provide security, an audit trail and set depreciation formulas that can be carried out with a single click.

If you are still using a spreadsheet or some other manual tracking system, you may want to consider a more advanced system.  A project management system will give you complete control of cash-flows, budgets and projects from start to finish.  You will be able to split budgets across multiple projects, divide as appropriate into categories and sub-categories, and run extensive reporting which will show commitment and spend progress at multiple analysis levels.  

If you have ever had problems with budgets when managing a project, it is worth looking at your budget controls and procedures and considering how you can implement a more structured system that also allows strong reporting capabilities for visibility throughout the project’s lifetime.

A document management system will allow you to build an electronic centralized database of all your records, which facilitates easy instant access to documents that may contain historical quotes, orders, invoices or anything else in their original form that you may want to view for verification or information. 

Additionally, a document management system provides a transparent document trail to ease reporting and can be accessed by multiple users at the same time (removing the need for many paper copies).  As a result, this may reduce audit costs by allowing auditors to quickly locate all records associated with any item directly from a computer, rather than searching the paper files.  Extensive historical information can be stored within a centralized electronic directory, enabling the archiving of paper records and significant physical space saving.

With the space savings, fast simple access and the potential for cost savings, its clear that an electronic directory for document management is a superior choice to maintaining only a paper based filing system.

Step 1: Agree on items to be audited

Determine what fixed assetsyou want to include in the audit.  Are you going to solely base the audit on your capital asset policy or will you also include expensed items that fall below the capitalization threshold?

Step 2: Decide what details you will collect

Some organizations are only interested in finding and verifying items.  However, other organizations may take the time to gather additional data, such as the condition of the asset.  If details haven’t been previously recorded (such as serial numbers, make, model, last serviced date, etc), then this may be a good opportunity to collect this type of information.

Step 3: Review and consolidate data for the audit

 Generate a report that includes all  your items that need to be audited.  Make sure to consolidate any data from multiple spreadsheets and reconcile them to eliminate potential duplicates and errors.

Once you have completed these 3 steps, you are ready to begin your physical audit.  Whether you are using barcode technologyor are manually checking, it will be simpler to complete the audit if you have planned correctly.

Tracking individual dates for even small fleets can be a time consuming process and it is easy to make errors when managing this task manually.  Calculations indicate that the associated work costs around $3,000 per year for a fleet of just 300 tanks and a significant $20,000 for a company with 2,000 tanks.

By automating test tracking in systems, these costs disappear, due dates are flagged up, customers are alerted in good time and management reports provide that essential safety net.

• 20% maintenance budget savings
• 17% stock and part holding reductions
• 19% increased equipment life

A system is able to help your organization realize this level of ROI by actively managing and reporting on all associated planned and un-planned maintenance.  Reports allow you to reduce equipment down time and maintenance costs by actively managing maintenance in a timely manner.  Also, information such as standard job time, downtime, defects, contract details and more can be stored against standard jobs, allowing for better planning. 

The powerful reporting features available in computerized maintenance management systems can help your organization realize significant ROI in addition to easing your maintenance management workload.

 For example, A1 may refer to a ‘healthy’ asset, where A6 denotes an item in need of replace.  When you run a report you will be able to see which items are A6 or approaching that condition and be able to replace needed items and plan for the future replacement.

 You should then change or update records as necessary following repair, damage or disposal, thereby keeping your records of your inventory’s condition up-to-date.  With up-to-date records and the ability to run condition reports, you will have the best control over your inventory.   If you are currently unable to run reports on the condition of your inventory, you should consider implementing an inventory management system that will allow you to do so.

Keeping physical files for each asset can become a drain on space and resources, while a spreadsheet can quickly grow cumbersome and out of control.  One way to maintain an organized and contained record of all your asset management data is to use a fixed asset register, which is built to house the information in an organized and searchable feature.    Thus allowing your fixed asset information to be organized without becoming a time consuming activity.

• Possess stringent, technically advanced security features
• Aid in compliance with GASB 34 requirements
• Generate comprehensive audit trails with details of actions performed by all users
• Calculate and retain depreciation for one book or multiple books, for any period or range of periods
• Run ‘what-if’ scenarios for future capital government expenditure and asset disposals

In addition to the features above, government organizations should confirm that the software is able to cater to all standard government requirements and accommodate agency –specific conditions.

By checking the details before updating the asset register, the user can become aware of any discrepancies.  For example:  The printer that was scanned in the finance department may need to be moved back to the administration department, so the suggested transfer event would then be processed.

 Once data has been updated, you can produce additional reports, thereby providing a comprehensive account of all the changes that have been made to the register for any further analysis that you require.

• The built-in basic asset register lacks the necessary functionality
• They do not meet group requirements
• There is no centralized system
• Lacks a cost effective fixed asset solution

Using a GL or ERP system requires that you must reconcile individual systems throughout your group, often leading to time consuming processes that open your organization to errors.  If your organization is still using a GL or ERP system for fixed assets, it may be time to consider switching to a specialist fixed asset management system.  

Find out more with our free Fixed Asset Management Evaluation Guide.

1. Reduced maintenance costs
2. Increased operational life of equipment
3. Reduced downtime
4. Increased customer service levels
5. Reduced paperwork

GASB 34, 35 and 51 requires that fixed asset records and intangible assets be maintained by public entities in a complete, accurate and detailed manner and that governments report all assets, depreciation and amortization (including infrastructure assets) and any items classified as “historical treasures”

Typical infrastructure assets include: roads/bridges, sidewalks, tunnels, sewers, and lighting systems.

GASB applies to the following government organizations:

• General governments
• Public benefit corporations
• Public school districts
• Public colleges and universities
• Public hospitals and healthcare providers
• Public retirements systems
• Public utilities

• Unique identifier
• Analysis codes (e.g. category, cost center, department, company)
• Multiple lines for descriptions
• Purchase costs
• Purchase and capitalization dates
• Asset life  and depreciation rule
• Quantity
• Residual value
• Grant value
• Foreign currency amount

 By including this information, you will have comprehensive records for your fixed assets and it will help facilitate easy reporting and auditing.

Your evaluation should include reviewing how assets are currently dealt with (are you using spreadsheets or do you have a specialist fixed asset system), is there a clear assignment of responsibility, and is your current system providing all the information and security you need. 

 If your organization does not have any specialist fixed asset system and/or specific practices in place, it may be time to consider implementing one and train employees to ensure your 2012 fixed asset records are correct.

 Need help?  Request our Fixed Asset Management Evaluation Guide here.

 With access to complete asset reporting and forecasting abilities, you can plan for any range of accounting periods, thereby facilitating the production of accurate budgets for the immediate future year and for longer periods.  Running different “what if” scenarios will help you see the effect of deprecation charges or events entered against both individual asset and categories of assets in the register.

By ensuring the relationship of the assets is kept intact, you are maintaining an accurate asset register and are less likely to experience ghost assets or zombie assets when performing a physical audit.

 The accurate management of fixed assets can lead to significant tax savings in depreciation deductions, while poor fixed asset management done with spreadsheets can negatively affect the accuracy of financial reports, causing re-reporting and ultimately impacting the bottom line.  Establishing the highest standard of depreciation accuracy and best practices in fixed asset management will pay off in savings.

Some expensed items are categorized as ‘portable and attractive’ and are therefore sometimes included in an audit.  Identifying and controlling these items is an important part of risk management and internal control.  Finding the balance between the benefits associated with greater control versus the costs of auditing these additional items, is something for your organization to consider. 

Leased items should also be included in an audit.  Audit managers should determining whether the company leases equipment and if so, how they can be determined.  Accidently disposing or transferring fixed assets that belong to a lease company can lead to fines and penalties.

Leading analysts including the leaders from Gartner, Forrester and IDC agree that this model offers significant advantages for fast-paced start ups, SBMs and enterprises alike.  Today forward thinking business leaders are opting for hosted solutions such as cloud computing to take advantage of the best practices that it has to offer, namely; scalability, agility, automation, and resource sharing.

To find out more about how Real Asset Management can offer a hosted solution, email us at solution@realassetmgt.com

• All required information is gathered in a comprehensive consultation
• Services can cater to single and/or multiple asset registers
• Outsourcing an audit eliminates the possibility of compromising existing resources
• Upon completion, a validated list of records can be imported directly into an asset register, affording considerable time savings.

Once a complete audit is done, you will be able to upload all your asset records to your register and be ready to properly manage your fixed assets.

However, while Excel spreadsheets are not suited for proper fixed asset management, they can still be a useful tool in your workplace.  Because spreadsheets may still be used for easy modification of asset analysis codes, descriptions, notes and date fields, it is important that when you are considering a fixed asset management system, you ensure that it is compatible with Microsoft Excel.  This will allow data to be downloaded, amended and then uploaded simply and in a matter of seconds.

Finance teams – can instantly access asset analysis reports and can completely define reporting to meet corporate needs

IT Managers – can set up parent/child IT associations and a detailed IT equipment register to keep track of all items

Asset Accountants – save time with a single screen data entry that includes batch functionality and the register can be updated with automated asset tracking

Auditors – easy auditing review with a comprehensive user audit trail and a single screen for summary of all asset events.

With the use of handheld scanners and specialist software, just about anyone can complete an audit.  Because of the ease of the barcode system, the auditor does not specific knowledge about the fixed assets, such as names of equipment.  All of the information is stored on the barcode label, thereby allowing any employee to scan the label and mark the item as found. 

By removing the extensive time barrier and the need for a specific employee to conduct the audit, specialized fixed asset software and barcode labels have made it possible for you to afford to conduct several physical audits a year.

With the option to get the new solution up and running within just a few working days, organizations can rapidly meet corporate demands for improved fixed asset management, including the adoption of mobile asset recording via PDAs. With minimal up front expenditure, the improvement in asset accuracy combined with the reduction in manual overhead delivers a very quick return on investment (ROI). 

Of course, before any such buying decision can be made, CFOs need to understand exactly what is offered and should review hosted solutions’ security and services.

Organizations also need to consider how the business will access the system? One option is a dedicated Virtual Private Network (VPN), which would further reinforce the security level, but organizations must ensure the communications bandwidth will deliver the required performance.

Whatever route a business decides to explore, there is growing pressure on CFOs to at least try out the hosted model.  Yes, a large proportion of risk adverse CFOs may well be unwilling to opt for a major financials implementation as a first venture into the hosted model. But even if the global financial situation radically improves and IT suddenly receives a massive input of resources, the finance team should be at least considering the financial and speed benefits.  Many now agree that it is time to test the waters of cloud and hosted model computing.

Data centers have experience dealing with a wide scope of security policies and practices and have specific operating procedures for the management of the facility.  Some of the security basics you should review include:

1. Climate Control – a data center’s performance depends on the right environmental climate.  The premium data centers have a continuous circulation of cool, perfectly conditioned air to provide the ideal environment for servers, routers, and other equipment. Most facilities use a sophisticated heating, ventilating and air conditioning system with enough capacity to easily exceed its needs.
2. Fire Detection and Suppression – confirm that preventative measures are the first line of defense against fires.  Air quality should be monitored by devices installed above and below the floor.
3. Power Backup – electrical power is fed to a data center’s Uninterruptible Power System.  This provides clean power to all equipment in the rare event of a power failure. For extended power outages, data centers can run on power generators for additional backup.
4. Monitoring & Alerting – high performance systems monitor the performance and security of your bandwidth and network around the clock, providing performance information about network connectivity and traffic utilization, as well as the security of your bandwidth, network and systems.
5. Network Bandwidth – look for high speed Internet connectivity over a world-class TCP/IP network. 

 In contrast, the option to leverage a highly secure, hosted, third party solution that can be delivered within days, rather than months, is compelling. Add in the appeal of monthly or annual subscriptions rather than the huge upfront cost of a perpetual license, and the hosted model has clear financial and business value.

 Indeed, a hosted fixed asset register offers a raft of additional benefits. Automated upgrades ensure the software is always up to date – a key consideration for compliance requirements, particularly in relation to the latest IFRS and SORP regulations affecting  organizations; while the hosted model also ensures the upgrade process can be achieved without any disruption or dent in user productivity.

Furthermore, a hosted model provides access to the system from any location, allowing members of the finance team to run reports, analyze asset information and check depreciation at any time, further boosting productivity.

 It is, perhaps, understandable that a CFO may be unwilling to rush headlong into the cloud with a business critical application such as the core financial software. But there are other aspects of the financial portfolio that provide a fantastic opportunity for testing the viability of the hosted model.

 Those companies that opt for a hosted fixed asset register can rapidly discover the benefits of the cloud and prove the long term viability of the hosted model for the entire software portfolio.  Over the next two weeks on our blog, we will be exploring cloud computing and hosted solutions for your financial software.  If you’d like more information now, please email us at solution@realassetmgt.com

1. Gross Book Values (GBV) and Net Book Values (NBV) at a specific point in time
2. Exact number of items to be converted
3. The number of accounting books to be converted.

These figures will help ensure the quality of the data and prevent errors wherever possible.

1. Stock can be managed through a FIFO (first in, first out) system.  This will record all stock movements and re-ordering criteria and generate purchasing instructions for your team.
2. A CMMS can hold all maintenance history, costs, bill of materials, current work orders, meter readings and maintenance schedules
3. A breakdown analysis using standard reports can enable users to identify maintenance strategies for individual items of plant and equipment.
4. Organizations can reduce maintenance costs, operational downtime and paperwork, while increasing customer service levels and health and safety awareness.
5. Automated stock level alerts will assist in optimizing stock management policies.

Specialist software can help simplify your tax compliance by providing:

• Instant access to a comprehensive audit trail
• Reduction in financial and tax reporting errors
• Direction for accountants on how to properly depreciate assets to comply with the guidelines set forth by the IRS and Section 404 of the Sarbanes-Oxley Act.
• Access to all books within one database that conforms with all state-specific and federal tax rules
• The option for calculating Section 179 deductions
• Creation of the F4562 worksheet based on calculated Section 179 deductions.

• Allowance for the management and allocation of software licenses against inventory items
• Integration with asset tracking software
• Ability to associate inventory records with consumable stock items
• Condition reports can be stored against each inventory item, stating a condition code, date and any notes required for future reference and analysis
• Able to issue current condition reports to assist with planning for future replacements
• Enables detailed and up-to-date records of IT equipment and associated software licenses to be held in one centralized database
• Ability to link documents such as letters, emails, purchase orders, invoices, certificates and contracts to be linked to inventory items

When reviewing new financial software, you should always perform a risk analysis on each supplier’s plan.  It is advisable to allow for glitches so that deadlines can still be met on time. 

High Risk Factors:

• Any bespoke development on the critical path
• Any deliverable that is not accurately defined
• Any time schedule that cannot be met by a supplier
• Software that has not been tested

Medium Risk Factors:

• Modified development, not critical to live operation
• Data conversion or data collection
• Hardware installations or upgrades
• Software installation and testing
• Sub-contracted resources
• Third party supplier involvement 

Low Risk Factors:

• Consultancy
• Training
• Auditing
• Technical support

Nominate a responsible project manager who will mitigate risks by allowing for unforeseen issues.  Avoid  changes in internal conditions by making your decision and placing an order soon after the evaluation stages are complete.  For more information about evaluating software, request our free fixed asset management evaluation guide.

Using a project control tool, plans can be funded by single or multiple budgets, allowing many different expenditure types to be categorized.   The construction of Work-in-Progress (WIP) assets, also known as Construction-in-Progress (CIP), can be enabled thereby allowing later transfer into your asset register.

A specialized tool that helps control budgets and integrates with an asset register can help you gain complete control of your projects, whether large or small.

A specialist lessee asset accounting system will enable an organization to:

• Report on future liabilities over a  1, 2 and 5 year period.
• Store finance leases and associated payment schedules.
• Split all “liability” payments into capital repayment and finance change (interest).   
• Reschedule leases (extending /reducing the lease length or changing payment amounts during the lease life).  
• Store lease agreement documents and associate this with the lease items when linked with document management software.
• Report on codes by configuring users codes for locations, type, supplier, department etc.

The answer to this question is pretty easy.  When you add a new user to the system, the software just needs to know what function that new user will perform.  So either the new user needs to be a Superuser or part of a User Group. 

You can add the new user as a Superuser under Options > User Security > User Password Access.  On the bottom left side of that screen, you should see a few options under “Security.”  Click EDIT on your controller, then tick the Superuser box and click SAVE and you are done.

To assign the new user to a User Group, go to the same Options > User Security > User Password Access screen.  Then go to the “User Groups” tag and click ADD on your controller.  Click on the drop down under User Group and assign them to one of the User Groups you have added to the system and then click SAVE.

If you don’t have User Groups set up, you may do so under Options > User Security > User Group Access.  Click ADD on your controller and give your User Group a title and Description and click SAVE.  You’re all done!

One more hint- if you wish to change the various security settings for a particular User Group, you can adjust those under the Access Rights tab and give each user group View, Add, Edit, and/or Delete rights to each section of the software.

The practice not only helps with present records and accounting, but also for future planning.  Accurate information can help allow for machinery life cycle planning, maintenance and replacement.  It can also be of assistance when complying with regulatory obligations and corporate governance requirements.  When using easy and quick asset tracking software, the benefits of completing a physical audit far outweigh the time required to do so.

With less than 40% of assets on the register easily identified during a physical auditand an estimated 20% no longer in existence, organizations are hardly getting value for money on expensive insurance premiums.  Furthermore, poor asset description typically results in claims being challenged by insurance assessors.  Without detailed information, such as a serial number or barcode, and proof of location, why should an insurance company pay out?  Make sure that your asset register, upon which your insurance premiums are based, is up to date in order to get the best and most accurate insurance coverage.

The practice of conducting periodic physical audits can assist with managing an asset register and keeping track of fixed assets.  Physical audits are essential to clean up variances between where you think an asset may be and where it actually is located.  An audit will allow better control over assets and the ability to track and plan for equipment upgrades.  If the asset register is not kept up-to-date with the movement of assets, it can quickly become an obsolete tool.

Some expensed items are categorized as ‘portable and attractive’ and are therefore sometimes included in an audit. Identifying and controlling these items is an integral part of a risk management and internal control strategy. An organization needs to find the balance between the benefits associated with greater control verses the inevitable administrative costs.

After agreeing on the items to be audited, the next thing to decide is what details will be collected. Some organizations are solely interested in finding and verifying the items, while others will take the opportunity to gather additional data. While conducting the audit, it is also a good time to note the condition of assets. If other details haven’t been previously recorded, such as serial numbers, make, model, meter readings, color, room location, last serviced date, etc., then this is a good opportunity to collect this type of information. With this data, a standard asset register can be turned into a powerful enterprise asset management tool. Audit managers should determine whether the company leases equipment and, if so, how they can be identified. Accidently disposing or transferring assets that belong to a lease company can lead to undesirable fines.

Finally the audit location(s) need to be clearly defined. If an organization is in one building then this process is relatively easy, but if it has multiple locations then either the physical audit will have to be rolled out in stages or it will have to be completed by teams.

1. Planning – select a project coordinator who will be available to manage the whole project; review your current system and pinpoint its strengths and weaknesses to establish a ‘wish list’ for your new system; and identify your time lines.
2. Create your project timeline – include time for planning, background information research, in-depth analysis, implementation and post-implementation.
3. Gather background information – get as much information as possible on each system you are evaluating.  This should include customer service and rough initial quotes.
4. In-depth analysis – review all the information you gathered in detail, ask for client references and verify what type of technical support will be offered.
5. Implementation – define your project deliverables with the solutions provider; execute the installation which will involve data conversions/collection and data loading, testing and training; and upon completion of training, check that all items in the definition stage are complete.

• Elimination of up-front capital expenditure
• 100% uptime
• Uncompromised security
• Hassle free & reduction of internal maintenance and support costs
• Data is stored on dedicated servers
• Security for all information relating to your assets

Top 8 Reasons to Implement a Fixed Asset Register:

1. Comply with all the latest accounting regulations including IFRS, IAS, US GAAP, Sarbanes-Oxley and Bill 198.
2. Multi-book and multi-currency.
3. Carries out asset revaluations, asset splits, transfers, relifes and retirements.
4. Produces detailed analyses and reports quickly and easily.
5. Provides a complete audit trail.
6. Commitment accounting facility for capital project control.
7. Generate Section 179 charges and bonus depreciation for applicable assets.
8. Ability to interface with most 3rd party applications including General Ledger and ERP solutions.

• Automated physical inventories
• Barcode tagging
• Useful life determinations
• Insurable value determinations
• Market value determinations
• Original cost determinations
• Property insurance valuations

 All of the above information may  then be included in your fixed asset management system, allowing your business to have the most accurate information available for reporting and decision making.

The finance team gets a complete analysis of all lease obligations and contracts.  Also, they benefits from analysis of all repayment and interest expenditure, historical and future.

Your management accountant benefits from detailed schedules of all payments and from flexible schedule creation and maintenance.

The asset manager on your team will receive accurate logs of all assets attached to leases as well as benefit from easy maintenance of assets and their leases, and storage of lease inventory items not declared assets.

A lessee management tool will prove invaluable to all companies that incorporate a leasing policy for asset purchases or require better controls on asset rentals.

Real Asset Management has released a Depot4000 module to dramatically reduce this administration time to an average of 5 minutes per invoice or even less, saving $$$s in administration costs.  This module is being welcomed by customers as a crucial time saving tool.

Also by using this module, leasing companies no longer have to estimate accruals and wait up to 2-3 months for depots and vendors to send final invoices for verification.  An accurate calculation of costs per unit is always obtainable and information is ready to be exported to the accounts system.

By self billing and producing pro-forma invoicing, companies can anticipate costs more accurately and calculate precise accruals with ease.  Over time, users can build up operational data to be analysed such as cost per location, cost per customer, etc.

Depot4000 works as an add-on module to RAM’s core Rental4000 solution, designed to help container leasing companies of all sizes manage their daily business activities.

A remote solution allows organizations to:

• Create ad-hoc work orders for immediate completion and receive emergency job information on the spot without the need to return to the office
• Access an up-to-date list of work order schedules
• Remotely access maintenance history, costs, stock levels, meter readings and asset details
• Record signatures, digital images and labor used against work orders

Viewing work orders on portable, handheld technology allows employees to easily access needed information and make changes that can be fed directly into a computerized maintenance management system (CMMS).  This ensures both effective resource utilization and increased time-savings.  A handheld system allows users the freedom to manage all planned and preventative maintenance and asset tracking without having to return to the office to retrieve information or to print documentation.

Because most organizations meet their maintenance requirements through a combination of both in-house resources and external contractors, a facility that serves as a repository for all work order information associated with contracts can be very helpful.  The information kept should include date of initiation, date of completion, costs, contract codes and descriptions.

1. It doesn’t meet group requirements
2. New workload requires changes to current e-business solutions
3. There is no centralized system
4. You must reconcile individual systems throughout your group
5. Lacks a cost effect fixed asset solution
6. Built-in basic asset register lacks the necessary functionality

If your organization is experience all or any of the above 6 issues, it may be time to consider a more robust fixed asset management system.   

To evaluate your current system further, request our Fixed Asset Management Evaluation Guide.

Because forecasting software is able to analyze the effect of depreciation charges against individual assets and asset groups, it can help the finance team make decisions about fixed assets and what is the best course of action, thus helping make your job easier.

1. Download the asset register to the scanner

2. Scan the location (if you have barcodes to designate room or building)

3. Scan the barcoded assets

4. Upload the audit results to your fixed asset register

With this easy 4 step process, your organization can verify the existence and location of individual assets and inventory items in a simple and quick fashion.  As a result, audits can be carried out more frequently to ensure your information is correct and up-to-date.  With asset tracking software and scanners, auditing is simply point and click.

By integrating your purchase order system with your fixed asset management system, you are removing one more step for your finance team and reducing the possibility of errors.

To avoid encountering overspending towards any project, you need to have complete control over cash flows and budgets.  A good project management system can automate the process and enable ‘Commitments’ (orders raised, internal charges) and ‘Spend’ (invoices received, journals) to be recorded against budgets for both capital and expense projects while also maintaining a detailed Work-in-Progress (WIP) asset register which can optionally transfer capitalized items across to the fixed asset register.

With everything in electronic format, the documents can be easily accessed by more than 1 person at once and you never have to worry about a file being left on someone’s desk or misfiled when returned.  An electronic storage system is also beneficial because documents can be filed in multiple folders if they are related to more than one project or fixed asset.    Plus, electronically stores files can include everything from word processed documents to spreadsheets, drawings, and photographs.

• All required information is gathered during an initial, comprehensive consultation
• Services cater to single and/or multiple asset registers
• Eliminates the possibility of compromising existing resources
• The auditing team can affix barcodes to all assets
• Upon completion, a validated list of records is imported directly into an asset register 

Outsourcing your auditing can afford considerable time savings and set you up to take advantage of a complete and accurate asset regsiter.  Should you be interested, please feel free to contact us, and we can put you in touch with some firms that provide these services.

A single centralized database allows your organization to manage and track the transfer of items between locations and business units.  It can also be used as a visual calendar for your team, showing maintenance history and scheduled works, overdue work orders, parts used/required, quantities, dates, meter readings and labor costs.  Having all the information about your equipment readily available can help decrease down times, defects, and confusion about maintenance schedules. 

In addition to the operational advantages, a maintenance management system will also help save money.  Many organizations have experienced a 20% maintenance budget saving, a 17% stock and part holdings reduction and a 19% increase in equipment life.

• Capability, customization and technical support are limited
• It is slow and clumsy to operate and/or to process information
• It has a poor reporting facility or it is difficult to extract accurate data
• You are unable to run it on company specific platforms or servers

If you are experiencing any of the problems above your system may be a risk to proper fixed asset management and auditors may insist that a more reliable system replace it.

Auditors must ensure that the accounts they are auditing comply with accounting standards such as the Generally Accepted Accounting Principles (GAAP) framework, International Financial Reporting Standards (IFRS), the relevant Statement of Recommended Practice (SORP)  and component accounting requirements.

For this process to run smoothly, an efficient and compliant asset management register is recommended to ensure all the company assets are accounted for in accordance with the relevant requirements. 

Auditors rely on the internal accounting systems and controls set up by the company, so it is the role of the CFO within each company to ensure they have reliable, compliant financial systems to enable auditors to gain a true reflection of the business accounts.

Financial details recorded against purchase orders, invoices, credit notes, journals and accruals can be automatically updated with a specialist system to ensure that key figures are always correct.  With the ability to store numerous descriptions, multiple analysis codes and detailed financial information against each entry, a project management system can provide a fully comprehensive solution in which transactions, including goods received are directly linked with projects and budgets.

1. Date based alerts – Highlighting warranties, insurance renewals, project end and lease expiration dates.

2. Event based alerts – when existing events have been edited/deleted; notification of data imports

3. Status based alerts – when a project status is changed to ‘complete’ or when a work order remains outstanding for more than x days.

4. Request based alerts – prompt where a second signature is required for authorization purposes.

A barcode system provides each asset or inventory item with a unique digital identifier which enables even identical units to be cataloged individually.  Eliminating the necessity for manual description checks, barcodes allows auditors to access all the information required to perform a full and comprehensive audit in just a fraction of the usual time. 

Barcode labels can be made to suite any environment or requirement and are available in a variety of materials such as vinyl, polyester and aluminum.  With the use of a scanner and tracking software, an audit can be completed in about 80% less time than if it were done manually with pen and pencil.  This savings leaves the finance team with more time to focus on other tasks.

When using a spreadsheet, you can’t be 100% confident in the integrity of your data.  One way to combat this is to consider a specialist system that has security features in place to effortlessly address the issue.  A specialist system can automate the fixed asset management process with data import capabilities and preset reports and forecasts. 

Automating your fixed asset management process and using a system with security features in place will reduce errors and increase your data integrity confidence.

The best way to do this would be using the Asset Split functionality.  You can split the item by percentage, quantity, or purchase cost to create what is essentially a separate asset. Then, once the split is complete, simply dispose of the item you do not want and you’re done! 

If you have any further questions about this process, please feel free to contact the Help Desk at 515-699-8564 or email us at RAMISupport@realassetmgt.com

1. Agree on the data standards – organizations should determine what assets are going to be included in the audit.  Are you going to include items based on your capital asset policy?  Or also include expensed items which fall below the capitalization threshold?
2. Review and consolidate the data – before starting an audit, an organization needs to compile a list (or pull a report) of all the items it thinks it has.  Once this is consolidated in a simple lists that removes any duplicates and includes information needed such as asset reference, description and location, you’re ready for step 3.
3. Determine your method – it’s time to consider if you are going to conduct your audit using pencil and paper, which can be very time consuming, or use a tracking system.  If you have implemented a fixed asset tracking system complete with barcodes or RFID tags, your audit will take 80% less time than a manual audit.
4. Analyze the results – now that the audit is complete, review the data and reconcile your findings with the information you had prior to the audit.  All disposals, additions, and transfers of assets should be reported to the relevant managers and updated in your asset register.

To read more about physical audits, request our whitepaper The How & Why of Physical Audits.

• Historic cost
• Current cost
• Realizable value
• Present value

Historical costs are the original costs that are incurred in acquiring assets or paying for expenses and they can be verified from source documents such as bank statements, receipts, invoices, and statements from suppliers. Historic costs also apply to liabilities and evidence can be corroborated from documents such as loan documents, leases, or hire purchase agreements.

Current cost is the amount that a business would have to pay to acquire an equivalent asset and it is mainly used in management accounts to underpin planning and control decisions rather than in financial or statutory accounts.”

A comprehensive asset management system can enable businesses to ensure an objective measurement of value for historic cost and use current cost analysis to deal with inflationary effects upon assets because the use of historical values may distort the business’ current financial affairs.

The University of Hawaii study findings include: 

• Spreadsheets contain errors in 1% or more of all formula cells
• Every past study reviewed by the team showed errors were always found in audited spreadsheets
• Errors in spreadsheets are consistent with data on human error rates from other work domains (Humans doing simple mechanical tasks make undetected errors in about 0.5% of all actions.  For complex logical activities, the rate rises to about 5%) 

As the authors of the study note, part of the problem is not only the errors in a cell in a spreadsheet, but how much that error is multiplied because of other cells that may rely on the information/formula from the incorrect cell. 

One way for organizations to avoid the repercussions of spreadsheet errors is to replace them with financial software.  To read more about how spreadsheets can be detrimental to your fixed asset management and how to fix the problem, request our whitepaper The 7 Sins of Spreadsheets.

1. Finance.

The finance team will have access to instant asset analysis reports and enjoy total user definition of reporting to meet corporate needs.

2. IT Managers

IT managers and their teams can set up parent/child IT associations and a detailed IT equipment register to better track and maintain all assets.

3. Asset Accountants

The asset accountants will save time and reduce user errors by using the single screen data entry with batch functionality.  They will also be able to implement automated asset tracking for register updates.

4.  Auditors

Auditors will have access to a comprehensive user audit trail and a single screen for a summary of all asset events, allowing for a clear picture of fixed asset management, thereby reducing time spent on the audit.

 In contrast, the option to leverage a highly secure, hosted third party solution that can be delivered within days, rather than months, is compelling. Add in the appeal of monthly or annual subscription rather than the huge upfront cost of a perpetual licence, and the hosted model has clear financial and business value. 

So why is it that the IT department rather than the finance team is driving the move to the cloud? Is this reticence based on educated mistrust and a justifiable decision not to hand over responsibility for critical financial data to a third party or a simple fear of the unknown?

• Calculate depreciation for federal and multi-state tax books and incorporates individual regulations for each of the 50 states
• Provide regular software updates  to accommodate changes in nationwide tax rules
• Assist with filing Form 4562 and produces a report summarizing GAAP to tax depreciation adjustments
• Generate Section 179 charges and bonus depreciation for each applicable asset
• Comply with all corporate governance regulations: Sarbanes-Oxley (SOX), IFRS, US/UK GAAP, GASB 34 and the Turnball guidance

Automating the above calculations and form information can reduce time invested in the process as well as reduce the possibility for human error.

One solution is a bar code or RFID tag system which provides each asset or inventory item with a unique digital identifier.  This allows all items, even identical units, to be cataloged individually.  Eliminating the necessity for manual description checks by using bar codes or RFID tags, helps auditors access all the information required to perform a full and comprehensive audit in just a fraction of the usual time.  What’s more, the use of an automated system significantly decreases the probability of human error that is inherent in the auditing process, thereby allowing your organization 100% accuracy.

The purpose of depreciation is to charge an element of the fixed assets annually to the profit and loss account to reflect the usage of the assets during the year.  Depreciation will continue to be charge to the profit loss account until the carrying value of the fixed assets have been fully depreciated.  That is, if the net book value of the fixed asset becomes zero.  Depreciation should cease once the net book value or carrying amount of a fixed asset becomes zero.

Another issue to solve when introducing software is that of asset transfers and disposals.  With a system that allows for event request authorization, an organization can expunge any manual processes in place that may require filling out forms that then have to travel from one department to another.  Inclusion of transfer/disposal authorization in the software will help to streamline processes and ensure that accuracy and accountability of an asset register.

If you organization is currently using spreadsheets as an asset register, this could be compounding the challenge of dealing with the volume of data.  With the amount of information available as your asset base grows, a spreadsheet will quickly become too large to properly manage everything.

If you have a specialist system in place or use the fixed asset module within a general ledger, it is important to review the functionality and decide whether it is still meeting your needs.  Older programs may not offer integration with other solutions that you require, such as asset tracking by bar code or RFID.  Or it may be that the basic asset register lacks the necessary functionality or reporting capabilities needed to address maintenance issues.

If an organization does have a specialist fixed asset system in place that has all the required functionality but continues to experience problems with asset management, it may be time to retrain employees and review current practices.

In addition to the ease of portability of one’s asset register, tablets can assist the finance team easily access depreciation schedules during planning meetings.  The information is right at their fingertips and several different scenarios can be run in order to help facilitate discussion and decision making.  Team members will no longer have to create a long list of follow up items, because they can be handled immediately and discussion can proceed rather than be rescheduled. 

Portability and immediate information are just two of the benefits of tablets to fixed asset management.  Can you think of others?   Share your ideas in the comments section below.

1. Finance team.  The finance team will benefit from instant budget/project analysis reports and complete sub-division and summary reports.

2. Asset Accountant.  The asset accountant can access analysis of spend by supplier and enjoy an automated process of managing budgets, projects and associated orders, invoices and credits.

3. Budget Manager.  The budget manager will experience a seamless integration with the fixed asset register and a simplified management of work-in-progress assets.

1. Provides IT Managers with a reliable tool to help keep track of valuable and portable items.
2. RFID makes data entry more efficient and reduces errors inherent in manual tracking.
3. Multiple items can be automatically scanned at once, which can save a significant amount of time.
4. No ‘line-of-site’ required; auditor don’t have to see the tag, they just have to be with-in its read range.  This means auditors don’t have to visually search for tag, or move / lift items to find the serial number or barcode tag.
5. Passive RFID labels are now very affordable, only costing slightly more than professionally printed barcode labels.

Whether used to compile an accurate inventory of assets or track the movements of assets in and around a given site, asset tracking solutions with RFID tags, can elimiate the need for direct scanning and reduce the time it takes to complete physical audits, making them a great selection for fixed asset managers.

1. Volume of Data – fixed assets can create data that continuously increases.  Throughout an asset’s lifetime, the amount of information about it will never decrease.  The file will continue to expand with information about depreciation, maintenance performed or required, whether it has moved departments, and so on.  If an organization does not have a proper system to record all of this information, it can quickly get out of control and disorganized.  
2. Tracking Assets – fixed assets may be transferred to another department or disposed of without the information making its way back to the accounting department, or to those that maintain the asset register.  If the asset register is not kept up-to-date with the movement of assets, it can quickly become an obsolete tool.  
3. Maintenance – fixed assets can often be quite costly and most are expected to last for several years.  In order to get the most out of an organization’s fixed assets, it is important that those items are maintained over time.  Without proper maintenance, assets may need to be replaced prior to the end of their average life expectancy or repaired more often than expected, thereby causing the company unforeseen costs.

• a particular service due date – never forget a preventative maintenance service again with an automated warning.
• an assets audit due date – ensure key, high value items are regularly audited.
• an event is added, edited or deleted – an event could be an addition, disposal, transfer, re-life, revaluation, split or enhancement.
• data is imported to maintain new asset or inventory utility – it’s useful to know when data is ready and waiting to be processed by the asset manager.

There are many more alerts available with a business activity monitoring tool which will help an organization never forget a critical asset date again. Alerts will help reduce labor by automating common tasks and each event can be tailored to an individual company.

A forecasting system that is part of your fixed asset management software will allow you to see the effect of depreciation charges, indexation, and capital charges or events entered against both individual assets and categories of assets in the register, allowing indexation to be applied.

The depreciation forecast allows acquisitions, disposals and relifes to be stated against groups of assets without requiring the user to specify precisely which assets will be affected.  An example would be a user budgeting for the acquisition of a new piece of medical equipment within a specified accounting period.  The effect on depreciation and capital charges will be associated with the appropriate asset type and a report produced based on that calculation.

Specialized forecasting systems will have the facility to carry out historical and current cost forecasting as well as forecasting by cost center/department.