Best Practices for Fixed Assets Management March 11, 2010 Quick | Convenient | Cost-Effective | Online Learning www.fmsinc.org | 800-ASK-4FMS Best Practices for Managing Fixed Assets for Financial Firms Rashid Nur BNA Software March 11, 2010 Quick | Convenient | Cost-Effective | Online Learning www.fmsinc.org | 800-ASK-4FMS • Sr. Product Manager – Fixed Assets • Responsible for BNA Software’s Fixed Assets Suite • 15+ years experience in Fixed Asset Management • 17+ years commercial software experience Today’s Presenter Rashid Nur BNA Software O: 703-341-3623 E:[email protected]
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• Which of the following items are described in your fixed assets policy document? (Select all that apply.)A. Threshold for assets that should (or not) be capitalizedB. Data that must be captured, maintained, and archivedC. How to depreciate fixed assets for GAAP and TaxD. How often to do asset inventory / what assets to inventoryE. Specific fixed assets reporting requirementsF. Do not have a policy
• Ability to Report on Required / all periods– Prior, current, and future periods
• Batch Reporting / list of reports for period-close– Sorting /grouping data to meet reporting requirements– Selecting required books (GAAP, Tax, State etc)– Summary, Detail, round/decimal, Page break
• Separate process to report on data / open backup data file
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Which of the following tasks is the most time consuming for you / your staff?
A. Data Input: additions, disposals, transfers, modificationsB. Reconciliation: data changes and reconciliation with GLC. Reporting: period-close activity reports, journal entry report
• Enforce Depreciation Policy for GAAP and Federal Tax regulations in the system (not rely on manual process)
• System should use predefined depreciation policy. Users should not manually enter Depreciation Method, Life, Rate, or Convention (it may be too late once you catch mistakes).
• If outsourced tax work to CPA Firm, increase quality of data by enforcing tax depreciation policy defined with help of CPA Firm– Assets may or may not qualify for bonus / whether or not you qualify for S179
deduction. Tracking how much S179 deduction or ITC taken or remaining etc
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• System should allow you to do“what if” scenarios / calculate depreciation with or without the bonus depreciation
• Helps you and your CPA determine how to depreciate assets, when to take bonus depreciation / S179 deduction – or not
• If you modify asset records, the system should automatically recalculate depreciation for GAAP and Tax
• System should include all data (additions, disposal, transfers) in the report. Eliminate additional processes to ensure accuracy (example, staff added 10 assets, printed acquisition report)
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• Assets Records (controls)• Require (certain) data captured during entry• Use of pick-list, drop-down list, set default values
• GAAP & Tax Books (controls)• Selecting proper Assets Class or Type• Expert system should have complete GAAP and Tax validation• Users should not manually enter Method, Life, Rate, etc.
• System Controls should be available in all entry points (whetherinterface or import tools)
• Physical Inventory of Assets– Compare assets on the floor with financial records– Physical verification of assets and condition of assets– Perform on a periodic basis / all or sample assets
• Asset inventory provides– Property tax benefits – Lower property insurance premiums– Federal Income Tax deductions (dispose ghost assets)
• Extensive Use of Excel– Calculating depreciation, potential errors– Long closing cycle: additions, disposals, modifications– No controls, security or validations– No audit trail tracking and documenting changes– Lack of comprehensive reporting / large spreadsheet– Knowledge of Excel file limited to one person– Essentially built depreciation software in Excel– Time-consuming to provide information requested by
external auditors or CPA firm performing tax work
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The Financial Managers Society, Inc. is the only individual membership society exclusively devoted to serving the needs of finance & accounting professionals from financial institutions. Our more than 1,500 members are CFOs, controllers, CEOs, COOs, treasurers, investment officers and internal auditors from banks, thrifts and credit unions.
FMS offers career-enhancing education, targeted news and research, national leadership opportunities, a voice in shaping regulations and accounting principles and connections with other industry professionals.
MissionThe mission of the Financial Managers Society is to enhance the professional development of financial personnel within financial institutions.
The Society accomplishes this mission by: •Offering premier education and information to members and others within the financial services industry regarding accounting, financial management, regulatory, operational, auditing and other industry issues.
•Providing various forums for the exchange of information and practical applications.
•Articulating industry and member concerns to regulatory and accounting policy-setting bodies.
•Providing members with opportunities for technical, personal, and leadership growth and development.