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Asset Management:

Best Practices for Small & Mid-sized

Businesses

December 6, 2007

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Session Objectives

Understand the impact fixed assets have on acompany¶s financial statement

See how utilizing the integration of Red MoonSolutions¶ Fixed Assets Manager (FAM) withSAP Business One can help you achieve

maximum accounting benefits

Review FAM¶s intuitive interface andcomprehensive tax calculations, which ensure acompany is compliant with all IRS rules andregulations

Learn best practices used by other companies intackling asset management

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Who is Red Moon Solutions?

Products/Services± Fixed Assets Manager� (FAM)

� Supported Andersen¶s internal U.S. tax practice

� SAP Business One Certified Solution Partner 

± Like-Kind Exchange Matching� (LKEM)

± WorldPro� Expatriate Solutions

± PowerOLAP � - Tax Department BusinessIntelligence Solutions

± eTaxCalendar � - web-based tax calendar 

± eTaxPortal � - SaaS collaboration workspace,including workflow and document management 

± Consulting Services

� Implementation & Integration

Founded by Jim Shedivy± Andersen Partner in charge of Tax Technology 

Enterprises

Ex-Andersen employees with minimum experience of 6 years

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Incorrect information and errors in fixedasset inventory data are a near universalproblem ± resulting in significant andunnecessary tax overpayments of 8% to20%

Asset Management Resource

(AMR)

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What are small businessessaying?

³ We can¶t get the fixed asset information we need from our 

accounting system.´ 

³ I spend too much time trying tokeep track of fixed asset data

and calculations in Excel.´ 

³ Were there asset dispositionswe didn¶t know about?´ 

³ It takes too long to providerequired information to the

different stakeholders.´ 

³ We do not know where our fixed assets are located.´ 

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Asset Management Challenges

Lack of controls and validation in Excel

± Complicated calculations & formulas must be

created 

± Lack of change control 

Difficulty tracking asset transactions

± Dispositions

± Transfers

Poor asset data management

± Missing asset locations, cost centers

± Different acquisition vs. in-service dates

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Impact on Financial Statements

Incorrect profit & income tax

± Continued depreciation on books for disposed assets

Incorrect property tax

± Unrecorded asset detail for classifying property 

Incorrect insurance costs and inadequate coverage

± Paying for disposed assets

± Missing new purchases

Poor purchasing decisions± Duplicate assets acquired 

Poor SOX compliance

± Inadequate controls and processes

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Financial Example

Number of Assets 1,000

Average Cost per Asset $500

Total Original Cost of Fixed Assets $500,000

Total Cost of Assets Lost or UnaccountedFor 

$75,000 15% of total cost

Assumed Corporate Tax Rate 35%

Estimated Federal Income TaxOverpayment

$13,125 37,500 X 35%

Potential Property Tax Overpayment $2,250 3% of asset cost

Potential Insurance Overpayment $750 $1 per $1,000 rate

Total Loss Per Year $16,125

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Overstated adjustments, deductions,exemptions and credits compromise up to $30billion per year in unpaid taxes, according toIRS estimates.

-IRS FS-2006-27November 2006

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Demonstration:

SAP® Business One&

Fixed Assets Manager 

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1. Order is placed in Business Onewith one or more items flagged as fixed

assets

2. Order Arrives. Now there is anaccount payable for the fixed asset

3. The fixed asset must also be

recognized and tracked in FAM

Fixed Asset 1

FixedAsset 1

4. Track depreciation over time. As time passes, FAMgenerates Journal entries for depreciation of fixed

assets which are posted to the General Ledger 

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Best Practices

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People

What are the key issues?± Asset acquisitions

± Tracking disposals and transfers

± Properly classifying assets

Who owns the process?

± Accounting 

± Fixed Asset custodian

± CPA (Tax)

Who is committed and willing to do the workrequired to improve the process?

What training and education is in place tosupport them?

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Process

Evaluate your current state± H ow are fixed assets recorded today?

± H ow are dispositions and transfers tracked?

± What are the standard or unique asset events that 

provide the most risk of failure?

± What processes and procedures are in place toensure regulatory compliance?

Model your future state

± What can be done better?

� Tracking assets by location

± H ow can risk be minimized?± What don¶t we have today that would make it 

easier?

� Better reporting 

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Technology

Do you have the infrastructure to support thesolution?

± System requirements

What solution is right to address your issues?

± Asset depreciation for book & tax 

± Robust search and ad-hoc reporting capabilities

± Ability to generate fileable tax forms

± Simple data conversion techniques for existing 

assets

± Ability to slice and dice your data for analysis

± Ability to get your data out easily to providereports to stakeholders and/or to respond to audit 

Can the solution be easily deployed andmaintained?

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Managing Fixed Assets for Maximum Bottom-lineImpact

HIGH VALUEASSET

MANAGEMENT

LIMIT AUDITEXPOSURE

STREAMLINECOMPLIANCE

REDUCE COSTS

ENABLE STRATEGIC PLANNING

Strategic

Activities

ComplianceActivities

 MANAGE ASSET LIFECYCLE

Time Spent on:

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65% of fixed asset data is incomplete,inaccurate or altogether missing, a potentialdisclosure risk for executives now responsiblefor certifying the accuracy of financial data as a

result of Sarbanes-Oxley compliance.- Asset Management Resource

(AMR) 

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What Are Next Steps?

Select champion or process improvement owner 

Take time to review current state

Analyze requirements, goals and objectives

Create ROI and/or business case

Secure budget and implement sooner rather than later!!!!!

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Thank you for joining us today.ou have additional questions or for more information, contact us at:

(941)379-7106

www.redmoonsolutions.com