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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