02

Aug

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.

13 years ago Short URL 1 Comment

Fixed Asset Inventories/Fixed Asset Management FAQ

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31

Mar

Physical Fixed Asset Inventory / Audit: Quick Start

In the past few months, I’ve received about one or two calls a week with questions pertaining to conducting physical inventories.  Which gets me thinking… Oh yeah, it is about that time a year again.  Internal audits of companies fixed assets! 

About this time every year is often when companies start putting deadlines on themselves for gathering their information.  Many times it is sparked by internal audit controls, SOX testing, reorganizing, or better yet, “the auditors just left and said we need to do a better job controlling our fixed assets“.

After having several conversations with all these different companies; their situations running in a variety of flavors… I get a little worried that perhaps, they are still going to venture off in the wrong path.  The one of destruction not success.

 Things to ponder and prepare yourself for BEFORE running willy nilly amongst your assets:

  1. First thing to ask yourself – Is everyone on board internally with this project?  By everyone I mean, departments other than Accounting?  Remember to think of your compadre who work there too.  Example: IT Department, Facilities, Tax Department versus Finance (crazy, but we run into this miss-communication factor quite often).
  2. Second part – where is your data now and what’s it look like?  Are you pulling your fixed asset data from a spreadsheet, home-grown system, IT’s list/system, Facilities listings?  You need to know what data you have and what it looks like so you can better determine what course of action you will be performing with your inventory.
  3. Third piece of the puzzle – AFTER you review your data and data sources, you need to determine if it’s best for you to perform either a Dynamic Inventory or a Baseline Inventory.  This is the BIG decision people!  You make the wrong choice here and you could be wasting a lot of precious time and end up taking f-o-r-e-v-e-r on your project.  Or even worse, you may end up doing it all over again!
  4. Moving forward – Labels / Tags… what kind, how many, what are they going to look like?  Order them and provide yourselves with a couple of weeks turn around.  It’s all about scheduling.
  5. Tag em’ – by now you should have already determined what you are tagging, where your putting the tag and who is tagging.  Also, you should have already decided by now WHAT information you will be gathering.  Seize the day and attack!
  6. The BIG Bear of Inventory – reconciliation time folks!  Keep in mind and be prepared that this CAN and WILL take some work.  Especially if your company is a first timer (meaning – you’ve never performed a physical asset inventory – ever).  However, this is where the fruit of your exhausting labor comes into play.  You get to find out what you have, what you don’t have (ghosts… BOO), where it is and who is responsible for it. 
  7. Last but certainly NOT least – keep up the good work my friend!  Now that you’ve cleaned up your data, keep it clean.  Now is the time to determine when you will be performing the next one to ensure that your data stays accurate.

Whew, I feel better getting that off my chest.  I know what you are thinking and I agree, that does seem like a lot to think about and plan before running like a crazy person through the field of assets.   Knowing about fixed assets is one thing… Trying to find them and clean them up is another! 

P.S. did you know that Paragon Systems offers an array of physical asset inventory services and consulting?  Yeppers… ala carte or full load.  Email me.

13 years ago Short URL Comments

Fixed Asset Inventories/Fixed Asset Management FAQ

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01

Mar

Baseline or Dynamic Asset Inventory?

When discussing someones upcoming physical asset inventory with them…  “Angie, we are just going to take our outside fixed asset listing of all our capitalized assets from [insert: CPA firm, outside agency, head department, etc.] and use that to FIND and TAG our assets.  We don’t need to do a Baseline because we already have a list.”

Really?  I don’t like to be frank and when I am, I am very diplomatic.  But honestly… the whole reason people come to me (or my other associates at Paragon Systems) is because they DON’T have a CLEAN list – or one they just adopted one.  The whole point is to gather data, reconcile back to accounting records and GET a clean fixed asset list. Why?  To continue to keep it clean so they know what they have and what they don’t.  There are many benefits to a clean and successful inventory.  Ok, getting off my soap box. . .

May I please share with you the reasons why you SHOULD NOT conduct a Dynamic inventory of your fixed assets if you don’t have a GOOD list — or one that hasn’t been yours?

  • List Integrity – the whole reason that someone takes over (brings in-house) their assets is because their ‘outsourced/other’ list isn’t correct.  Right?  Right.
  • Timing – it’s going to take a LOT of time and man-power to look for every needle in your very large haystack. 
    • Individual timing: instead of taking an average of 3 – 5 minutes tagging and collecting data for one asset, it will take about 30 – 60 minutes.
    • Overall project timing: months and months and months of tagging and data collection.  Will you ever really finish?

  • Reconciliation – it is always easier and more efficient to conduct your reconciliation off-line back at your desk than on the fly in the field.  Once you’ve collected your data during a baseline inventory, you can always perform a comparison against your data in Excel.  This assists you with filling two (2) buckets: matched assets and unmatched assets.  You will be able to determine which assets you will need to investigate on (the not matched) much quicker AFTER collecting your data (via Baseline). 

Dynamic – GREAT option for those of you with a fixed asset list.  Upload your data into an automated hand-held bar code scanner (preferred method) and start your inventory.  Update any / all descriptive fields of information while you are in the field.  End result – validating your data in the field.

Baseline – You have no accurate list (or a list at all) or a highly imperfect one and you start tagging your assets to capture all the data about the asset.  Although it might seem obvious, make sure that you pre-define what information you will be collecting on your assets before you go willy nilly.  End result – building your list.

Bringing my point home.  Why spend days, months or even years hunting for a needle that may not even exist at the end of the day?  If you have a list you DON’T trust (or one at all), go Baseline!  Who wants to start over?

More information on the differences between a Baseline and a Dynamic phyiscal inventory.

13 years ago Short URL 1 Comment

Fixed Asset Inventories/Fixed Asset Management FAQ

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15

Feb

Love Your Assets – Tag Em’

Do you truly love your fixed assets?  How about giving them a Valentine today and get serious about conducting a physical inventory!  Sounds romantic doesn’t it.

Ask yourself this question, has your business or organization ever conducted a fixed asset inventory audit?  Is your answer no?  This is all too common.  What everyone doesn’t understand is that knowing what you have and what you don’t have is a really big deal and greatly impacts your budget amongst other benefits.

Not only does conducting an inventory audit ensure your accuracy of asset information on your books, it also sets a best practice of managing your assets.   Before you even think about starting your inventory, you need to make sure you have everything planned out and ready to be executed BEFORE you (or anyone off the accounting street) hit the floors with a clip board and some inventory tags.  This will turn out to be a disaster!  A few things to think about prior to auditing:

  1. Company-wide Participation — Make sure everyone and all departments are on board with this project.  If not, this project will fail before it even gets started.
  2. Asset Tagging — What are you going to tag?  Where will you place the tag? How many tags will you need, will they be customized?  What about the starting sequence?  The best one… what TYPE of tag are we going to implement?
  3. Data Collection — What information will be obtained when we are out there?  Where in the heck will all this information go both in the field and out of the field?
  4. Reconciliation — Now that you’ve collected your asset data, make sure you match to your original records and CLEAN THEM UP.
  5. On-going Management — Now what’s your plan for the future?  Don’t take all that time to clean just so you can get dirty again.

Now that you have shown some love to your fixed assets — nothing says you really care like an automated full circle fixed asset management solution!  No, spreadsheets don’t count here – nor do clipboards.  What should you choose?  Hahahaaaa… well, Sage FAS Track Pack with industry leading bar code readers of course!  Email me a valentines asking how you can get started showing the love.

From my assets to yours, Happy Valentine’s Day!

13 years ago Short URL Comments

Fixed Asset Inventories/Fixed Asset Management FAQ/Sage FAS Fixed Assets

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26

Jan

Anyone Missing Fixed Assets?

Recently myself and another senior fixed asset consultant went on site for a discovery meeting at a prospects who are having issues with controlling their fixed assets.  Some were tagged, some were not.  Those that are/were tagged had different types/formats of tag’s, etc.  They have about six (6) locations throughout the United States and have their fixed asset data in about 8 different Sage FAS companies — each one set up a little different.

Their computer equipment assets that were getting ready to be disposed of.  However, some had tags, some didn’t… not all were recorded to accounting — and if/when they were… they didn’t always have a unique asset id number to use. 

After about a two (2) hour discussion about their upcoming project and what the best approach would be, my associate and I walked out the front door… and a TON of their fixed assets were too!  Guess what, they didn’t know.

Best practices of conducting your own physical asset inventory – free webinar.

13 years ago Short URL Comments

Fixed Asset Inventories

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08

Apr

Stolen Fixed Assets

Physical Inventory = theft deterrent.

Common Question – How can stop getting our assets stolen, or even better, track our assets so we know if they are stolen?  The answer is always the same, and the answer is easy… CONDUCT A PHYSICAL ASSET INVENTORY of your fixed assets!  For cryin’ out loud.

Recently (March 2010) Paragon Systems conducted a physical inventory of all fixed assets at a large hotel because the hotel client wanted to account for all assets because they were afraid people might steal them when they moved, demolished or had to close down.  Smart.  Just a week after Paragon’s team left, this hotel now (finally) has a complete listing of EVERYTHING in their hotel: furniture, fixtures, computer equipment, office equipment, ART (see my other entry about hotels & resorts and their art), gym, pool area, kitchen equipment, and much more.

Most companies don’t take the time and effort in implementing a full-blown physical inventory of their fixed assets (capitalized or expensed), but I tell ya what… do it once and then you can maintain it going forward.  Like anything else a company implements: CRM systems, Accounting systems, etc.  The heavy lifting is getting it up and running with extremely great (or we strive to make it) work flow.  After it’s implemented, moving forward is a breeze.

My final note: make sure you are keeping all your assets out of the hands of someone else!

14 years ago Short URL Comments

Fixed Asset Inventories

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09

Feb

Economic Benefits of a Fixed Asset Management System

Most companies look at the initial costs associated with a fixed asset inventory service and a fixed asset management software solution, but fail to realize the bottom line benefits of a successful implementation.  The focus should not be on the cost of the solution, but on the cash flow benefits of not paying unnecessary taxes and insurance premiums.  This actual return on the investment in the project often gets overlooked.

Top Economic Benefits

  • The solution typically pays for itself.  A complete implementation typically uncovers at least 15-30% unrecorded retirements in an organization.  Correcting this discrepancy results in an immediate write off, reducing income taxes, property taxes, and insurance premiums.
  • Audit support.  Records are now more accurate, tied directly to a tagged physical asset inventory, updated annually, and facilitate auditing tests.  Compliance with provisions of the Sarbanes-Oxley standards are also enhanced.
  • Decrease carrying costs.  More efficiently gather and maintain accurate information on fixed assets.
  • Reduce property taxes.  Only pay taxes on assets that are at the location.  This is especially important when a firm has multiple facilities located in different tax jurisdictions with different tax rates and exemptions.
  • Avoid unnecessary purchases.  Increased control over spending money on additional equipment by reassigning and utilizing idle equipment instead of purchasing new.
  • Leased equipment tracking.  Avoid lease termination penalties by simplifying the process of tracking, locating and returning equipment when the lease term expires.
  • Accurate insurance premiums.  Eliminate the concern that the firm is over or underinsured.  Match your insurance coverage and premiums with the actual assets.

We realize that we bring this topic up a lot… but some people still need convincing.  So we believe it’s our job to keep hitting it home.

14 years ago Short URL 1 Comment

Fixed Asset Management FAQ

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20

Jan

Counting And Tracking Your Fixed Assets in 2010

Yes, we are at that time of the year again that causes business administrators everywhere to tremble in their comfortable heels or wingtips (depending on your preference).  No, no, it’s nothing so benign as “bring your child to work day”, its fixed asset inventories – ya know – the counting and tracking of your fixed assets… and all that they entail that often strike fear in the hearts with unerring accuracy.

Everybody counts something: sheep, stars, carbs, calories, what you have.  I and my team, count assets, lots and lots of assets, even the phantoms.  When a fixed asset is lost, stolen, or deemed unusable but still listed as an active fixed asset, it becomes a ghost asset.  Don’t call them Casper, they’re not that friendly.  Ghost assets are a drain on your company’s time, energy, and ultimately your pocketbook.  In fact, since I’m such a smarty pants… 65% of fixed asset data is incomplete, inaccurate, or altogether missing, while 10-30% of fixed assets are no longer even owned.  10% – 30%!  It’s not a quantum leap in logic to then assume that a company might be overpaying taxes and insurance by about 30%… is it?  Ouch.  It is time to exorcise the demons and get these ghosts out of your house and off your books.  And that’s only going to happen with a solid physical fixed asset inventory.

Benefits of Counting and Tracking Your Fixed Assets:

  • Elimination of ghosts assets
  • Minimization of taxes and insurance premiums
  • Reconcile your findings against your balance sheet – start fresh n’ clean
  • Finally automate your depreciation [I would strongly suggest Sage FAS] so you can obtain LAW ABIDING books
  • After all is said and done – you actually KNOW what you have and WHERE it’s located

In the end… all your ducks are in a row, you have smiling and happy administrators, and finally, you can sleep well knowing that your fixed assets are under control.  Good night and happy 2010!

FREE Physical Asset Inventory Needs Analysis Request

14 years ago Short URL Comments

Fixed Asset Inventories

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09

Sep

Which Fixed Assets Should I Inventory?

Great question! 

When performing a walk-thru to assess a physical inventory that has already taken place, I often run into bar code tags (or tags without bar codes) stuck to just about everything – including doors and walls!

When preparing for a fixed asset inventory, one big question to ask yourself: does it move?  If your fixed asset moves, those are the assets you should be tagging.  The purpose of tagging a fixed asset with a unique identifier (a numbered bar code label) is so that you, or anyone else within your company can easily and quickly identify the asset no matter where it moves – plant A, or plant B for example.  Although it may be obvious to some that you shouldn’t (and sometimes can’t) physically tag a building improvement or the building itself, sometimes, it gets a little confusing.

Other items that may or may not be including in your physical inventory depend on your capitalization policy — but that’s for another day.

Happy hunting for your fixed assets!

15 years ago Short URL 1 Comment

Fixed Asset Inventories/Fixed Asset Management FAQ

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20

Aug

Baseline Inventory – or – Dynamic Inventory

Baseline or Dynamic is the question; that depends on your situation.

Definitions of both are:

  • Baseline Physical Inventory: No field validation – no database
  • Dynamic Inventory: Real-time field validation – you already have a database

Which one should I perform?  That really depends on: 1) your project, 2) the integrity of your current data , and 3) have you ever performed an inventory yet?

Once you know the answers to those questions, the answer of which inventory is best suited for your project will be staring at you in the face!

Remember, determining if a Baseline or Dynamic inventory is better, this is only ONE piece of the puzzle.

P.S. I personally provide a free 1 hour online Webinar on the Best Practices of a Physical Asset Inventory.  Every second Friday of each month at 11:00 a.m. (PDT).  http://www.paragon-net.com/FAS-online-training/fixed-asset-inventory-webinar.html

15 years ago Short URL 1 Comment

Fixed Asset Inventories

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