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?

Construction In Progress Accounting

Construction in progress (CIP) accounting is often misunderstood in the fixed asset world.  Many think this just pertains to construction companies or the construction industry, when in fact, it means so much more than that.

Construction in progress simply refer’s to a project that is not yet completed that includes capital budget items. Companies may have one or even hundreds of CIP projects.  Each project may include just a single line item or hundreds within a project. Within those line items, each one will have a transactions of expenses/invoices associated (money in and money out).  At the end of the day (or project), the expenses for the individual line items are summed up, thus providing you with the total amount that needs to be capitalized as a fixed asset when placing that asset in service. 

Examples of construction in progress accounting projects include (but not limited to):

  • Actual building construction: brand new building; new wing addition to a hospital; new location building; etc.
  • Assembling Machinery Equipment: tracking multi-component machinery for production at a manufacturing plant.
  • Leasehold Improvement: building within the space you are leasing for your business.
  • Remodeling project: renovations of the complete space or just one section.

Many companies utilize spreadsheets to track and organize all of the expenses for their projects, but often times these spreadsheets are very time consuming and labor intensive.  Misrepresentation of the projects itself can occur due to manually entering in invoices, overlooking critical expenses, etc.   No need to worry, there is a better solution out there.  The Sage FAS CIP Accounting solution not only offers the full capability to track all aspects of your projects accurately, but also provides the reports necessary to ensure your project(s) are under your “budget” control.

If you need more info on the fabulous CIP Accounting solution, just holler via phone at (877) 824-6834 ext: 164 or via comment on this Blog entry.

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