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Rolling Out Large Fixed Asset Management Projects

It’s that time of the year again when companies (large and small) are just starting to think about their year-end processes (or just finished with them and their Auditors) when fixed assets come into play.  Property tax season is now coming upon us all and shortly thereafter… tax filing.

When getting ready to prepare for this type of fixed asset management project, people tend to have a mini (or large) freak out.  I want to remind you all that you don’t have to bite off more than you (and your budget) can chew.  Have you ever thought about breaking your project out into prioritized phases?  Below is an example of the kind of a approach you can take to complete your full fixed asset management project.

Real World Example

Background: Company XYZ is a large fortune 500, multi-location, publicly traded company.  They have well over 50,000 assets within the U.S.
Current Issues they are facing:

  1. No automated system to calculate their TAX, State and AMT depreciation calculations = hand calculated (spreadsheet formulas) and delayed filing and delayed provisions. (P.S. they are using an ERP solution)
  2. Inaccurate fixed asset listings – due to never performing a physical asset inventory or reconciliation = leads to inaccurate:
    1. Property Taxes and delayed filing
    2. Improper insurance coverage
    3. Financial reporting
    4. SOX 404 Compliance risk
  3. Multiple locations that need an inventory with bar code tagging = thoughts of many, many dollars run through their minds.
  4. Lack of policy/procedures = lack of maintaining accurate fixed asset records.

Recommendations to perform an ACCURATE and MANAGEABLE fixed asset project.

Priorities for this Client were to get their federal Tax, State and AMT calculations automated.  We based their project off of this high priority.

  1. PHASE ONE: Implement an automated fixed asset accounting solution (Sage FAS 500 Asset Accounting was used).  Finalize this project implementation, work through the data and get it live for use.  Ran their 4562’s, 4797’s, etc.  Receive an immediate return on the software and implementation costs.
  2. PHASE TWO: Start to roll out the physical asset inventory project  through a pilot program.  Starting small — prioritized the PILOT by number of anticipated fixed assets and activity.  Finalize and reconcile this data to observe the findings and obtain an immediate cost recovery on project.
  3. PHASE THREE: Perform the physical inventory on the other locations that were necessary – again, based on priority.  Reconcile results – find and capture the return on investment by property tax savings and insurance premiums.
  4. PHASE FOUR: Implementation of an automated fixed asset inventory solution that supports the use of bar code readers / technology (Sage FAS 500 Asset Inventory was the solution of choice).  Now the Client can maintain the clean database and keep it maintained with annual physical inventory audits, etc.
  5. PHASE FIVE: Consulting on on-going use / maintenance of the fixed asset solutions and complete management.  Set in place policies/procedures and train staff on the workflow and systems where necessary.

Working with a Phase approach to fixed asset management works to keep it manageable.  Not only is it manageable for your staff and your business… it’s also manageable for your budget, as each phase pays for itself at the end.  Every step of success opens doors for more.

Need consulting help with your fixed asset management roll-out?  Call us today at (541) 338-7898.

www.FixedAssetConsulting.com | www.FixedAssetSoftware.com

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Not All Sage FAS Users Should be Created Equally

Here at Fixed Asset Consulting, we have been performing many data conversions lately.  Mainly data that has been in the Sage Fixed Assets Depreciation (formerly Sage FAS) and was outsourced.

The biggest problems we are running into during our analysis and process is that those ‘outsourced’ professionals who are using the Sage Fixed Asset System (or any automated fixed asset system) are not entering the asset information in correctly.  Here is a list of what we have been seeing (note: not all the data we are analysing and fixing are from the same source/end users):

  • Bonus depreciation not being utilized consistently.  Some assets have it on, others don’t.  Same property type, same placed-in-service year, etc.
  • Bonus depreciation not being used at all even though the Client is claiming in on their tax returns.  This means that even though the Tax calculations are outsourced, the Client still has to perform off-line adjustments and calculations on a spreadsheet.
  • Inconsistent data entry and misuse of critical depreciation fields.
  • Property Types are incorrectly used. I.e. Buildings and building remodels are set to Personal Property with a 39 year life and a straight-line method.  Should have been set to Real Property.
  • Adjustments were never taken and trued up on the data.  This is causing a lot of over and under depreciated assets to occur at the end of the assets life, creating a NBV on a fully depreciated asset.
  • One line items that represent 3 or sometimes 10 assets.  When reconciling this information back to the customers off-line data or internal data, some of those “assets” where disposed of.  Or… the sum of the 3 assets don’t equal the total amount of the one asset in the outsourced system.

We could go on and on, however, many times this stems from the end-user not being professional trained on the system, being thrown into fixed asset management role without training, not communicating properly with their clients or just not knowing what they are doing.

Not all fixed asset users or those managing fixed asset data should be created equally.  Problem is, many don’t know this is happening until it’s too late.  Don’t be one of them.

Fixed Asset Consulting – Giving Back to Fight Cancer

Fixed Asset Consulting, LLC Give Back Attack!

FACT: their were over an estimated 1.6 million cases of new cancer and deaths in the United States alone in 2012.

More information on Cancer facts, you can DOWNLOAD Cancer Facts & Figures 2012
[PDF version, 1,700 KB].  Provided by: The American Cancer Society.

For every fixed asset management service contract signed with Fixed Asset Consulting, LLC (starting December 1, 2012) through December 31, 2013, FAC, LLC will donate 2% of the project total to Stand Up 2 Cancer in your companies honor.

Services include: data conversions into the Sage Fixed Asset solution of products, customized training on the Sage Fixed Asset products, fixed asset consulting, asset inventory services (tagging, data collection, reconciliation or consulting), outsourced fixed asset management services.

Angie’s personal story: Angie’s StandUp2Cancer Profile

StandUpToCancerYou can help Team FAC / PDM Give Back Attack reach our personal goal of $25,000 by December 31, 2013.  Cancer is bigger than all of us… let’s assist our kids, future kids, grandchildren, future grandchildren and other family members have a fighting chance.

Donate Today!

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SAP Fixed Asset Accounting

Fixed Asset experts, Paragon Systems, now authorized for Winshuttle Query & Transaction utilities to simplify enterprise asset management and reporting for larger customers using SAP.

Chicago, IL (PRWEB) December 29, 2011

FAC (http://www.FixedAssetConsulting.com) has announced their certification for both Winshuttle Query and Winshuttle Transaction software utilities for SAP reporting. Using the Winshuttle utilities, FAC is able to help larger U.S.-based companies overcome significant shortcomings and inefficiency associated with the native fixed asset management functionality in SAP.

Angie Bolton Lyons, Senior Fixed Asset Consultant and Sage FAS Fixed Asset expert at FAC, says her company’s interest in Winshuttle began by listening to customer needs. “Many of our larger clients using SAP Fixed Assets were running into significant challenges. When it comes to fixed asset management, accounting in SAP isn’t well-localized for U.S. companies.” Bolton-Lyons says that those clients were forced to use spreadsheets and perform manual calculations outside of SAP in order to manage important processes like quarterly tax updates, reporting, and complex deprecation calculations.

The right tools, she says, make all the difference. “The data doesn’t extract cleanly out of SAP fixed assets if you’re using Excel or some other manual method. But with the Winshuttle utilities, we’re able to get the live data out easily and accurately using a simple three-step process. It’s so much cleaner, faster, and most importantly saves our clients a tremendous amount of time and hassle.”

FAC consultants use both Winshuttle Query and Transaction utilities to pull accounting data from SAP and transfer it seamlessly into Sage FAS Fixed Assets. Bolton-Lyons says, “Sage FAS Fixed Assets is far more flexible and capable when it comes to enterprise asset management. Once the data is in Sage FAS, our clients can run calculations and get the numbers they need in minutes – not days or months.”

According to Bolton Lyons, the problems with SAP fixed asset accounting (http://FixedAssetConsulting.com) really aren’t unusual. “FAC knows fixed asset accounting is a different animal and requires specialized knowledge. To some clients, it may seem counter-intuitive to add more software to an enterprise system like SAP. But Winshuttle Query and Transaction are really just utilities that make their existing investment more valuable and useful.” She adds, “And when they see how much time, hassle, and costs that we eliminate from the fixed asset process, it’s a no-brainer for our larger clients.”

———— UPDATED 03/2018 ——————————————-

FAC has since then created their own automated tools that pull directly from standard SAP fixed asset accounting reports and automates the data flow into other fixed asset solutions (like the Sage Fixed Assets Premier solution for Tax purposes).  For additional information on our SAP fixed asset accounting solutions for use with the Sage Fixed Assets systems for Tax, State and AMT reporting and tax depreciation purposes, visit: https://www.fixedassetsoftware.com/sap-tax-depreciation

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Are Your Fixed Assets Audit Ready?

While on site last week performing fixed asset consulting and data work, my client had encountered last-minute auditors. Not just one, but three (3) from different places. Funny thing was, they were keeping their fixed asset listings and their CIP (construction in progress) accounting assets in the same spreadsheet. Boy, was it a long one with filters and pivot tables, etc.

During the first day of my stay, I uploaded their fixed asset records into FAS Asset Accounting, ran some preliminary depreciation to balance back to FY 2010. In a matter of hours I was able to prepare a report in 3 different formats and export out to a PDF for the corporate Controller. At the end we noticed about a $95K difference in depreciation – in their favor!

The next day the Auditors were in and out of the Controllers office asking all about fixed assets and their current schedule and if they could get a listing sorted by asset class / asset type with sub-totals by location. With their current “system” (aka: spreadsheets and SAP fixed assets), they couldn’t get this or make this readily available. However, with Sage FAS Asset Accounting they were able to very quickly.

Thank goodness they had a fixed asset Consultant on deck that week. Next time they have an unexpected / unanticipated audit (they thought they had until December), they will be even more ready with CIP reports as well. So the question is… are YOU and YOUR fixed assets audit ready?

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Top 5 Ways To Find Money Through Fixed Assets

Wow… today the stock market crashed so big it has probably got us all thinking… where do we go from here? Which also gets me thinking — how can businesses find some cash flow so they have some “rainy day funds” (or for operating expenses) in their back pockets?  Then it dawned on me… if they manage their fixed assets properly and received detailed cost segregation studies or had a proper 3115 study done, then shoot, EVERYONE could have extra cash flow.

If you think about it, there really are many ways to capture extra cash flow through fixed assets.  From very small efforts to large.

Top 5 Ways Fixed Assets Can Capture or Re-capture Cash Flow

  1. Cost Segregation Studies – extra Tax Deductions with properly classified fixed assets.  Money is in the DETAILS, not in bulked entries everyone!  Make sure you capture your 100% bonus depreciation for 2011 – it will go away soon.
  2.  Rev Proc 2007-16 Study – 3115 assets; allows taxpayers to change their method of accounting and claim the allowable depreciation (or amortization) amount they never claimed (i.e. bonus depreciation, etc.).
  3. Physical Fixed Asset Inventories – cost savings all across the board with Property Taxes, Insurance Premiums, Financial savings impact and more.  Have you ever done one of these before?
  4. Asset Appraisals – is it really worth TODAY what it once was?  Probably not.
  5. Automated Depreciation System – if you are still stuck in spreadsheet land for calculations, believe me when I say, YES you ARE missing additional expense and bonus that you are entitled to.  I see it every time I open someones spreadsheet!  Doesn’t matter the size of the organization or spreadsheet, there is ALWAYS calculation error, sometimes in the millions.

Which industries would benefit from these services / studies?  Just about all industries, well, maybe government and non-profit wouldn’t benefit from all five, but certainly from a couple.  Industries that would uncover a ton (always in the thousands – sometimes millions) from one or all five: hospitality, data centers, banks, manufacturing, retail, healthcare to name a few.

Now I know why I love waking up every day to go to work for the past 14 years (and growing)… because everything I (and my associates) do each and everyday help people and their businesses grow.  Who doesn’t like that?  Probably the same people who don’t like furry fuzzy kittens.

 

 

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ERP Fixed Assets Workflow To Sage FAS Asset Accounting

It’s obvious that companies utilizing an ERP for their fixed asset depreciation and management are getting frustrated – or perhaps they are just now seeing the benefits of implementing a true fixed asset module.  Because of this many are asking what or how do we update FAS Asset Accounting or keep both systems in tune.  Maybe it’s best to just explain what the choices are and we can move on from there.

With this being said, I thought I would explain the two options in a basic format – without giving away all of our knowledge.  After all, this is why we get paid the big bucks – but not as big as an ERP Consultant. 

When implementing a true fixed asset system to work with your ERP system, you have two options:

  1. ERP Parent—FAS Child: Maintain GAAP/Internal depreciation inside ERP asset management and only Federal Tax, AMT and State books in Sage FAS Asset Accounting.  Activity added/updated in ERP, exported out, format updated, imported into FAS AA.  Recommended that you also maintain the GAAP/Internal book in Sage FAS Asset Accounting but only for reconciliation purposes.
  2. FAS Parent—ERP Child: Utilize Sage FAS Asset Accounting for all depreciation—export entries out of AP/PO in ERP.  Upload into FAS, maintain ALL activity in FAS Asset Accounting (no need for disposal and transfer tagging), book depreciation entries into ERP GL.  No reconciliation necessary between ERP asset management and third-party solution. 

From the sounds of it, you would sway towards option 2 – FAS being the asset keeper, organizer, etc.  However, many organizations can’t step away from the ERP being finances Parent / Controller — so then, we are left with implementing option 1.  Either way, it’s far better than what occurs when you DON’T use a third-party solution to run, capture and report on federal tax and state calculations.

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SAP to FAS Asset Accounting: Live Update 7

Coming down the home stretch… We are now finalizing the 4562 balances of all six companies!  Guess what happened along the way? 

Through data mining and going through their data output with a fine tooth comb, we discovered millions of dollars worth of discrepancies, for bonus depreciation and mis-appropriated adjustements — in their favor!  What a fun day that was!  As I anticipated, our project has already paid for itself 20 times over and we are 70% finished.  Which leaves a good 30% left for more positive outcomes!

Wow… moving federal tax depreciation and state calculations out of a monster system such as SAP (or any ERP solution) – including to a ton of off-line spreadsheet adjustments, you might actually benefit more than you think!  So… why is it again YOU aren’t making the switch to Sage FAS?  Yes, I know… good question!

Next step in this process, agreeing to State balances and working out Quarterly updates.