Archive for Opinion

Insist on the appropriate solution….

Karen Garcia, Information Services and Technology (IS&T) Chief of Staff, BMC argues that, “IT departments can become much more valuable to the business by using the right tools for managing highly complex financial processes and facilitating better decision making.”

In order to identify essential spend and to verify the accuracy of budgeting, CIOs should consider implementing a business management solution that not only provides the detailed lifecycle information (which spreadsheets and general ERP systems can lack), but also provides the ability to improve planning, budgeting, and analysis.

By taking this approach, the IT department can control costs, increase cost transparency for IT and its customers make more informed decisions and help meet the needs of the business more effectively. 

Learn how Real Asset Management (RAM) can assist you with Integrated Asset Management software which will enable your organization to manage your capital accounts and leases, control projects and verify and track your entire asset base to meet auditor requirements.  To request further information on Integrated Asset Management click here.

Why you should review your fixed assets system for 2012…..

Financial directors may be putting their companies at risk by continuing to rely heavily on Excel spreadsheets.

How an organisation manages its assets has multiple effects on a company’s finances, from tangible costs of heightened insurance premiums through to neglected depreciation. Having an accurate and robust asset register that shows the location, value and condition of assets can also help ensure that resources are available and usable when needed as well as achieving compliance with key industry legislation. And whilst spreadsheets are adequate for collecting basic data, there are several compelling reasons for switching to a bespoke system designed to cope with these intricacies.

Too many spreadsheets contain errors, which is to be expected with information entered by hand. Whether it be the background asset data or the formula itself, there’s little doubt that depreciation calculations, when based on a spreadsheet, are likely to be inaccurate – potentially affecting the overarching balance sheet. Furthermore, with the raw data within a spreadsheet dictating that each report be constructed individually using complex macros, this also wastes valuable time and resources at month-end.

With such a high degree of attention focused on your organisation, why would you risk the integrity of your data by relying solely on spreadsheets, which are inherently instable and invariably achieve poor audit results?

Request information on how Real Asset Management can help you manage your assets using a specialist IFRS and component accounting compliant asset register, just click here.

Why consider a hosted solution option to manage your asset register?

Making the change to moving your asset register over to a hosted solution can be a difficult decision to make, especially when organisations get accustomed to their IT departments setting up and installing their software hardware and managing the overall support of the system.  

However, the advantages of hosting a cloud system heavily outweigh the disadvantages.  Primarily the organisation will lower upfront capital costs and ongoing operating costs, as there will be no back end server hardware to purchase, install, test and launch making your ongoing operating costs more manageable, predictable and affordable.

If you take the option to manage your asset register on a hosted solution you will enable your organisation to be fully functional with the software within a few working days, so that they are meeting the corporate demands for improved fixed asset management and automated asset tracking, using handheld mobile PDA’s to record asset history and location. 

Additionally, you will be able to entrust your ongoing management and administration of your solution allowing your organisation to focus on its core competencies, instead of managing external IT systems.

Ultimately, it is the overall elimination in upfront capital expenditure, whereby reducing internal maintenance and support costs which will be key in saving valuable time and creating grater efficiency within your organisation.

If you would like to consider hosting your asset register and would like more information on how Real Asset Management can help you do this please click here.

What is all the hype about hosting your solution….

Not all organisations have the facility of fully equipped IT departments as well as the technical and application skills required to successfully manage a critical IT department within a business.  A hosted solution enables a more secure environment for the delivery of IT software due to lower capital expenditure, improved financial control and rapid deployment.

Leading analysts including the leaders from Gartner, Forrester and IDC agree that this model offers significant advantages for fast-paced start ups, SBMs and enterprises alike.  Today forward thinking business leaders are opting for hosted solutions such as cloud computing to take advantage of the best practices that it has to offer, namely; scalability, agility, automation, and resource sharing.

To find out more about how Real Asset Management can offer a hosted solution, please email us at solution@realassetmgt.co.uk.

Forecasting management software can help you plan and save time and money for your organisation….

Accurate forecasting is an essential part of business decisions and the area of asset management is no exception. 

In order to budget more accurately, many organisations will use financial software, which can use existing asset information to run ‘what-if’ scenarios for future capital expenditure and asset disposals.  Accountants and finance teams can build any number of different strategic models and present the most cost-effective and tax-efficient capital budgets. Forecasting software can help you to plan and forecast for any range of future accounting periods or years and produce precise budgets for the immediate future year and for longer periods.

It will also enable the analysis of the effect of depreciation charges against individual assets and asset groups, helping  the finance team to make decisions about fixed assets and what is the best course of action, thus helping make your job easier.

The importance of implementing a Lessee Asset Accounting system….

With the proposed new leasing rules from IASB dictating that past operating leases now be managed as financial leases and all lease contracts be recognised as assets and liabilities in an organisation’s published statements, managing leases on a spreadsheet will very quickly become unmanageable, due to the complex calculations involved and the increased number of leases/payments to be held.

A specialist lessee asset accounting system will enable an organisation to:

• Report on future liabilities over a  1, 2 and 5 year period.
• Store finance leases and associated payment schedules.
• Split all “liability” payments into capital repayment and finance change (interest).   
• Reschedule leases (extending /reducing the lease length or changing payment amounts during the lease life).  
• Store lease agreement documents and associate this with the lease items when linked with document management software.
• Report on codes by configuring users codes for locations, type, supplier, department etc.

To find out more about Real Asset Management’s Lessee Asset Accounting solution please click here.

Still struggling with spreadsheets? 7 reasons why you should implement an asset register….

1. Comply with the latest accounting regulations including IFRS, SORP and Sarbanes-Oxley.
2. Satisfy auditor requirements by ensuring a complete audit trail.
3. Apply multi-book and multi-currency breakdown where required.
4. Carry out asset revaluations, asset splits, transfers, relifes and retirements.
5. Produce detailed analyses and reports quickly and easily.
6. Record ‘Commitments’ and ‘Spend’ against budgets for capital and expense projects.
7. Seamless interface with your Finance/ERP solution.

To find out more about how Real Asset Management’s specialist fixed asset solution can provide you with all the above key requirements, click here.

Simplify auditing with barcode technology…

Barcodes will speed up your physical audits, enabling them to be both fast and efficient.  The use of barcodes can provide an accurate audit because they remove the inherent human error of incorrectly identifying assets.  By using barcode scanning technology you can create a confirmed electronic trail of items that have been found and update details such as the location and condition which is synchronised back to your asset register. 

A barcode system provides each asset or inventory item with a unique digital identifier which enables even identical units to be cataloged individually.  Eliminating the necessity for manual description checks, barcodes allows auditors to access all the information required to perform a full and comprehensive audit in just a fraction of the usual time.

A barcode scanner will allow for an audit to be completed in 80% less time than if it was conducted manually, which saves enormously on physical auditing costs across the finance division allowing the team to focus on other tasks.

To find out more about Real Asset Management’s barcode tracking software please click here.

Eliminating errors with automated capital project control software

Managing a project and capturing every aspect of expenditure relating to each stage of the project cycle whilst maintaining any number of budgets can prove a time consuming and difficult task if using manual processes such as spreadsheets.

To avoid encountering overspending towards any project, you need to have complete control over cash flows and budgets.  A good project management system can automate the process and enable ‘Commitments’ (orders raised, internal charges) and ‘Spend’ (invoices received, journals) to be recorded against budgets for both capital and expense projects whilst also maintaining a detailed Work-in-Progress (WIP) asset register which can optionally transfer capitalised items across to the fixed asset register.

To find out more about Real Asset Management’s capital project control software, please click here.

How Auditors can affect your business…..

The Companies Act requires small to medium companies to have their business accounts audited each year and check that the businesses  and internal accounting control systems are representing an accurate view of the company’s financial performance, position and ability.

The auditors must ensure that the accounts they are auditing comply with accounting standards such as the Generally Accepted Accounting Principles (GAAP) framework, International Financial Reporting Standards (IFRS), the relevant Statement of Recommended Practice (SORP)  and component accounting requirements. The audit should also comply with the requirements of company laws outlined in the Companies Act.

For this process to run smoothly, an efficient and compliant asset management register is recommended to ensure all the company assets are accounted for in accordance with the relevant requirements. 

Auditors rely on the internal accounting systems and controls set up by the company, so it is the role of the Finance Directors within each company to ensure they have reliable, compliant financial systems to enable auditors to gain a true reflection of the business accounts.

How to measure your business assets and liabilities…

All businesses need to measure their assets and liabilities for an overall valuation on the business.  Assigning an economic value to business transactions such as assets or liabilities is part of measuring the value or the cost of these events to the business. In an article published by Munya Mtetwa, from Accounting suite 101, she outlines,” there are four main bases of measurement of the value of assets or liabilities and they are:

•Historic cost

•Current cost

•Realisable value

•Present value

Historical costs are the original costs that are incurred in acquiring assets or paying for expenses and they can be verified from source documents such as bank statements, receipts, invoices, and statements from suppliers. Historic costs also apply to liabilities and evidence can be corroborated from documents such as loan documents, leases, or hire purchase agreements.

Current cost is the amount that a business would have to pay to acquire an equivalent asset and it is mainly used in management accounts to underpin planning and control decisions rather than in financial or statutory accounts.”

A comprehensive asset management system can enable businesses to ensure an objective measurement of value for historic cost and use current cost analysis to deal with inflationary effects upon assets because the use of historical values may distort the business’ current financial affairs.  For more information on comprehensive asset management software, which will enable your organization to produce accurate automatic historic and current cost analysis, click here.

3 ways your asset management software can help with Sarbanes Oxley Compliance

If your organization is using software for fixed asset management, there are three features it should include in order to assist with Sarbanes Oxley compliance.

1. A method to secure outside access to the database.  The parameters required to access the database should be stored in a registry, access to which can be controlled through standard security features.  The key parameters (database, user name and password) should be able to be encrypted within the registry using proprietary security encoding.

2. Database design integrity.  The software should utilize a relational database which provides relational integrity.  These databases should all include security controls that prohibit editing of the database in a way that is not fully audited.

3. Auditing and password security.  A controlled security environment employed by your software should determine access to individual options, features, forms, reports and processes.  In particular, you should be able to restrict whether each user can view, add, edit or delete records.

These three features with assist with internal control in relation to fixed assets under the SOX mandate, which incorporates all financial aspects of a company’s business, including revenue recognition, valuation of securities, provision of adequate reserves, and so on.

Understanding Depreciation…

Businesses use fixed assets such as plant, property and equipment in generating revenues and as infrastructure for the business. Fixed assets are not charged to the profit and loss account rather they are reported on the balance sheet and they stay on the balance sheet.

The purpose of depreciation is to charge an element of the fixed assets annually to the profit and loss account to reflect the usage of the assets during the year. Depreciation will continue to be charged to the profit loss account until the carrying value of the fixed assets have been fully depreciated that is if the net book value of the fixed asset becomes zero. Depreciation should cease once the net book value or carrying amount of a fixed asset becomes zero.

Real Asset Management offers a specialist asset register which caters for all asset types and and is a fully customizable depreciation software tool.  Organisations can choose to consolidate multiple registers for group reporting purposes and can concurrently maintain discrete financial information.

Have you as a Local Authority struggled to cope with IFRS this financial year-end?

IFRS are International Financial Reporting Standards, which are issued by the International Accounting Standards Board (IASB).

The International Accounting Standards Board (IASB) and the International Financial Reporting Standards (IFRS) that they issue are very important for the future of accounting. With businesses turning global, it is important that investors are able to compare companies under similar standards. Likewise, it is important for businesses operating in multiple countries to be able to create financial statements that are understandable in all of the countries they operate in.

With the necessity for Local Government to manage their accounts under IFRS regulations, Southwark Council, London’s largest social landlord and community services provider has chosen Real Asset Management’s solution to become, ‘IFRS-compliant’.   Dennis Callaghan, Chief Accountant at Southwark Council explains, “the complexity of having to adopt IFRS accounting processes means that we require a tool which allows us to manage our assets at a more detailed level than we have before, with greater flexibility.”

Additionally, the upcoming component accounting requirements, which involve identifying each asset and recognizing where parts of an asset depreciate differently, were another key reason why Southwark Council adopted to ‘invest in a software package specially designed to take on complex depreciation calculations at component level.’

If you would like to confidently comply with IFRS and component accounting for 2012 financial year-end, please click here to request a free Local Government review pack.  Alternatively to find out more about how Southwark Council are benefitting from a specialist IFRS and component accounting asset register please click here to request a copy of the case study.

The real benefits of automating (month-end) regular procedures

From an article recently published on accounting web, ‘Automating regular procedures (e.g month ends) – the real benefits’, it is evident that ‘month-ends’ can be for most accountants ‘a desperate panic of late nights trawling through those familiar journals and spreadsheets to hopefully pull together a set of management accounts that make some kind of sense.’

However, have you ever considered the cost your organisation is enduring from using manual processes to complete your end of year accounts, such as:

1. Missed business opportunity – focusing more on getting the numbers than interpreting them can cost the business dearly.
2. Increased staff turnover – the extra workload and pressures can mean it is harder to hang onto employees.
3. Less accurate accounting – with little time and lots to do, the accounts are prone to errors.

By investing in a specialist asset register, which automatically calculates depreciation, capital charges on all your assets, your business can avoid the extra stress, time and inaccuracies caused by pressure exerted on accountants to manually process all asset accounting related reports.

For more information on specialist asset management software which will enable your organisation to automate its asset accounting processes, please click here.

Top tips when searching for comprehensive asset tracking technology

The latest asset tracking technology software enables users to conduct comprehensive, cost-effective and speedy physical audits.   Barcode labels or RFID tags are attached to the fixed assets and inventory items and handheld scanning devices are used to conduct the physical audit.

When looking to buy asset tracking technology ensure your system will enable you to:

• Update the status of items on site and in real time using portable scanners.
• Upload as many data fields as required from the asset register to the hand-held unit.
• Input details such as make, model or serial number ideally displayed in a scrollable format on the hand-held unit.
• Allow assets and inventory items to be flagged as transferred, disposed of or missing.
• Utilise advanced search facilities allowing ‘rogue’ items to be quickly identified by a variety of criteria (e.g. serial number).
• Verify and check actions arising as a result of the audit prior to updating the register.
• Create transactional records for verified transfers and disposals automatically, with all updates and transactions recorded in a log for reporting purposes.

 By ensuring you have these key functionalities in place, your organisation could realise potential savings of up to 70% on physical auditing costs and provide accurate cross-charging of information to other departments.  For more information on the benefits of asset tracking, please contact Real Asset Management today.

The asset management challenges of becoming an Academy…

Schools are stepping up to the self-governing opportunities of Academy status. But how many have considered the challenges associated with managing a multi million pound fixed assets base?

The government has laid down clear requirements for asset management and procurement within the Academies Financial Handbook, published by the Department for Education. Yet few schools have yet to address this aspect of the new self-managing model. There is huge confusion about what assets need to be recorded and how it is to be done, as well as the need for regular audits.

 The good news is that Academies do not need to record every item in the stationery cupboard. The bad news is that they do need to track more than just the obvious high value items such as buildings and cars. At the most basic level, Academies now have to create an asset register that includes any item with a capital value over £500. However, many will also opt to include attractive – that is stealable – items, such as digital cameras and projectors, that fall below this threshold. The result could be an asset register that includes many thousands of assets.

 Real Asset Management’s Series4000 range of asset management and tracking software is a tried and tested solution for academies enabling compliance with IFRS and the DfE Academies Financial Handbook. Its software provides comprehensive functionality for managing all fixed asset requirements, including depreciation of assets, barcode tracking and automated physical audits. To obtain further information on the key issues facing academies and schools seeking academy status and the solutions available, please click here.

The importance of adopting a proactive approach to Software Asset Management (SAM)

In order to avoid audit proceedings from software companies, businesses must begin to take responsibility for internal SAM programmes, and proactively achieve a best practice approach which will help them avoid legal action, fines, and also the costly over-purchasing of software licences (‘Software industry drives revenues with licence audits’, computerweekly.com, 14^th February 2011).

 Indeed, according to the Ernst & Young report, ‘just 20% of IT departments have put in place formal programmes to manage software asset management’. From this it is clear that businesses still need to understand that gaining control over SAM can save significant sums – an important criteria for those with stringent IT budgets – and help organisations avoid the legal risks associated with under-purchasing.

 From the powers accorded to the Federation Against Software Theft (FAST) to the importance of the ISO 19770 software asset management standards, the stakes are extremely high. Yet many organisations still fail to recognise that poor software licensing policies within the IT department could result in up to a 10-year jail term or a hefty fine.

 Organisations cannot afford to rely on piecemeal policies and inadequate asset information. It is only by instigating rigorous asset acquisition and disposal policies and recording detailed information about the software loaded onto every machine, that any organisation can attain real control over the software asset and prevent over-purchase of software licences.

 Companies could certainly be losing money due to a poor understanding of SAM, and never before has there been a more compelling argument to kick-start a proactive approach to improve internal SAM programmes.

 For more information on how a specialist asset management system can help you more efficiently manage your software assets, please contact RAM today.

Have you made a move to a ‘green’ asset register yet?

Statements about green strategies, from procurement to recycling, carbon footprint to flexible working will not suffice in the long term…..

Increasing pressure for green credentials will create a significant cost for businesses unless organisations get their asset register in order.

Assessment of environmental practices and reporting is certainly on the increase for business and generic statements about green strategies from procurement to recycling, carbon footprint to flexible working will not suffice in the long term: organisations are having to prove their commitment through information transparency and auditable policies.

At the heart of such transparency will be consistent, detailed information about the life cycle of every asset – from country of origin through maintenance schedules to final disposal.

Existing green policies such as the WEEE directive and measuring carbon footprints assume a level of asset management far beyond that achieved by the majority of UK business. How many UK businesses can accurately identify the location of their WEEE equipment within the organisation and confirm when it was purchased and from whom? By linking the asset register to a document management system, organisations can create the required audit trail, gaining valuable insight into their own assets and adapting to the green economy.

For further information on the benefits of a ‘green’ asset register, contact RAM today.

Are you under pressure to componentise your transport infrastructure assets?

The new Code of Practice from CIPFA relating to the financial management and reporting of local highways infrastructure assets dictates that assets are reported on a current value basis in Whole of Government Accounts with a full audited dry run completed for 2011/12.

This has resulted in more and more Local Authorities in need of a specialist asset register which can confidently comply with IFRS and component accounting.

Those Local Authorities still using spreadsheets to manage its fixed assets will struggle with the increased complexity of the financial reporting required under the latest IFRS regulations as well as the sheer volume of asset records that will be created as a result of moving to component accounting. A specialist asset register on the other hand, enables local government organisations to embrace such issues with confidence by for example, providing the functionality to calculate historic and current cost depreciation and revaluation reserves at component level (also accounting for highways and infrastructure assets).

Importing revaluation data from spreadsheets will also save valuable time whilst avoiding errors associated with manual data entry. Additionally, calculating accounting entries for revaluations and impairments and making the appropriate journal postings to the GL will ensure a seamless process.

With regards to managing leases under IFRS, a centralised database of finance and operating leased assets with associated payment schedules will help to ensure that you are meeting key financial requirements.

If you are considering the move to a specialist system and would like more information on how it manages IFRS and component accounting requirements, please contact RAM today.

Are you struggling to manage your leased assets in line with the latest IFRS requirements?

With the focus on lessee asset accounting becoming ever more crucial for FD’s under the latest IFRS requirements, managing leases correctly has never been so important.  To add further complexity, the proposed new leasing rules from IASB will force listed companies to recognise lease contracts as liabilities or assets in their published statements.

Key to ensuring that you have the right processes in place is firstly to set up and maintain a centralised database of leased assets and manage the payment schedule associated with all operating and finance leases, so you can split out both the interest and capital elements of the repayment.  It is also important to produce year-end reports, breaking down outstanding obligations analysis by payments due next year, for years 2-5 and years 5 plus.

If planning the purchase of a specialist lessee asset accounting solution, consider how it will enable the effective tracking and management of leased assets across the organisation as well as how it supports the integration with the capital asset register so that the finance leases are appended to the appropriate capital asset record.

For information on how Real Asset Management can enable you to manage your leased assets more efficiently and in compliance with the latest IFRS requirements, please click here.

Is your organisation at risk by continuing to rely heavily on Excel spreadsheets?

Recent article published on Financial Director online (http://www.financialdirector.co.uk/financial-director/feature/1933404/unhealthy-appetite) questions if Financial Directors are putting their companies at risk by continuing to rely heavily on Excel spreadsheets to collate and report a wider range of financial and management information.

 Indeed, this may be the case and especially applies to the complex processes associated with managing the capital assets register.

 How an organisation manages its assets has multiple effects on a company’s finances, from tangible costs of heightened insurance premiums through to neglected depreciation. Having an accurate and robust asset register that shows the location, value and condition of assets can also help ensure that resources are available and usable when needed as well as achieving compliance with key industry legislation. And whilst spreadsheets are adequate for collecting basic data, there are several compelling reasons for switching to a bespoke system designed to cope with these intricacies.

 Too many spreadsheets contain errors, which is to be expected with information entered by hand. Whether it be the background asset data or the formula itself, there’s little doubt that depreciation calculations, when based on a spreadsheet, are likely to be inaccurate – potentially affecting the overarching balance sheet. Furthermore, with the raw data within a spreadsheet dictating that each report be constructed individually using complex macros, this also wastes valuable time and resources at month-end.

 Compliance with the latest legislation including IFRS, Sarbanes-Oxley (SOX) and SORP consists of improved financial management and increasingly detailed reporting. With such a high degree of attention focused on your organisation, why would you risk the integrity of your financial data by relying solely on spreadsheets, which are inherently instable and invariably achieve poor audit results?

 For more information on how your organisation could benefit from implementing a specialist asset register and making the move away from spreadsheets, contact RAM today.

Review your Fixed Asset Management policies for 2011

The start of a new year is the perfect time to review and improve an organisation’s key business policies and the area of fixed asset management should be no exception.

Precise fixed asset data is essential to most organisations, with reliable records enabling finance professionals to protect what is invariably a significant investment. From providing values for insurance coverage to statutory reporting requirements and financial statements, accurate fixed asset management is a key factor in formulating policies and strategies for acquisitions, maintenance, replacement and asset retirements.

To request your free white paper detailing how you can improve your fixed asset processes in 2011, click here.

Looking for the simplest way to adopt component accounting?

With this financial year-end fast approaching, more and more housing associations are now facing up to the enormity of the challenge of meeting the latest SORP requirements, from the implications of component accounting on depreciation to the new data and reporting processes required.

 From scoping the project to creating and reconciling data, a manual approach to component accounting could take years for larger housing associations – always assuming the resources are available. In contrast, a streamlined approach that combines depreciation modeling with data migration and automated reconciliation based on industry best practice can transform the speed and cost of SORP 2008 and IFRS compliance.

To learn how over 80 Housing Associations are already benefiting from software that is compliant with SORP/IFRS and Component Accounting, click here.

The importance of Medical Equipment Maintenance Management

The maintenance of medical equipment has become the lifeline of hospitals, with hospitals being unable to do without modern medical equipment modernisation. The survival of hospitals depends not only on the level of healthcare provided but also the efficiencies applied to the maintenance of medical equipment.

The medical equipment/EBME departments within a hospital are generally responsible for inspecting and managing the maintenance of medical equipment across its Trust, ensuring that the breakdown of equipment and accidents made during diagnosis and treatment are avoided. A specialised medical maintenance system will ensure the accurate tracking of medical equipment across a Trust as well as manage and report on all planned and reactive maintenance, both historic and current. Such a system will also enable costs associated with and recorded against a job to be automatically stored against the medical equipment which allows the Trust to identify how and where its maintenance budget is being spent. In addition, PDA handhelds for paperless mobile management can enable work requests to be delivered real-time to the relevant internal technicians or contractors, improving response times, reducing charges and increasing user satisfaction.

With Medical Equipment departments being forced to operate within ever tighter budgetary constraints, more and more NHS Trusts are turning to RAM’s easy to use and functionally rich integrated asset management solution to increase staff efficiency and reduce departmental costs. For further information on medical equipment maintenance, please click here.

Ten good reasons to move away from spreadsheets and switch to a specialist asset management system

1. Government requirements – With increased scrutiny from the government, reacting to recent business reports and requests from investors, there are now higher standards of accountability, transparency and overall corporate behaviour.  In addition to this, there is now a strict accounting requirement to comply with IFRS, Sarbanes-Oxley (SOX) and SORP for improved financial management and increased detailed reporting.  Relying solely on spreadsheets, will achieve instable and poor results.

2. Inaccurate depreciation calculations – Manual entry onto spreadsheets will leave you prone to errors, as the information is entered by hand.   Additionally, with more than one person managing and editing spreadsheet  data,  errors are even more likely.  Finally, relying on one person’s knowledge solely brings its own risks; if they were to leave the knowledge would be lost.

3.  Lack of Audit Trail and overall security – A specialist Fixed Asset Register will track and record every detail of every action made by any user, which is unachievable with spreadsheets.  As there is a security username and password required, heads within the departments can ensure confidential information is only viewed by those who need to see it and safely hidden from those who don’t.

4. Inability to link ‘parent/child’ assets and conduct asset splits/batch disposals etc – The ability to link parent/child assets is crucial, so one can establish hierarchical relationships.  For example, this association may be between a PC, being the ‘parent’ and software licence, the ‘child.’  The option to dispose of the ‘child’ asset will follow the transfer or disposal of the parent asset, keeping the relationship intact.  Spreadsheets are unable to accommodate the parent/child asset relationships, making it difficult to track and manage these hierarchical dependencies.

5. Access to multi-currency, multi-lingual or multi-book capabilities – With many organisations operating in different countries multi-currency, multi-lingual and multi-book capabilities are most likely imperative to allow core asset information to be shared across any number of books, enabling compliance with local and group depreciation policies.

6. Historical reporting and forecasting requirements – Composing reports from spreadsheets can be a complicated and daunting process, as they have to be analysed individually and often using complex macros, which is time-wasting and often prone to errors.   Using a specialist Asset Management system which incorporates standard and customised reporting and forecasting will ensure an intuitive method of extracting and analysing data quickly and accurately.

7. Lack of confidence in data integrity – You cannot control your data fully, when using a spreadsheet, as input error is inevitable.  However, you can be 100% confident of the integrity of this data.  A specialist system will have strict security features in place to automate the entire process, so much valuable time will be saved.

8. Communication and transparency – With growing pressure within organisations to do more with less, communication and transparency between departments is key to streamlining the business processes.  Therefore sharing asset information across multiple departments can deliver increased efficiencies and direct financial savings.

9. Insurance Premiums – A tangible ROI realisation for businesses to implement such a system, results in the dramatic lowering of insurance premiums and more successful insurance claims.  With less than 40% of assets on the register easily identified during a physical audit and an estimated 20% no longer in existence, organisations are not getting value for money from expensive insurance premiums. Furthermore, poor asset description typically results in claims being challenged by insurance assessors. Without detailed information from a specialist system, such as a serial number or barcode, and proof of location, an insurance company will be less likely to pay out, a risk that businesses cannot afford to take.

10. Software licensing – Using a dedicated asset management system can save significant sums through reducing the over-purchase of software licenses and help organisations avoid legal risks associated with under-purchasing .  Many organisations still fail to recognise that poor software licensing policies within the IT department could result in a 10 year jail term so they cannot afford to rely on piecemeal policies and inadequate asset information.

The true benefits of conducting physical audits for Finance Directors/Managers

In order to have better control over the recognition of the theft of your asset base, the shrinkage of your assets, deterioration of your asset base and the misuse of assets, you must conduct a physical audit.  Verifying what an organisation owns and the whereabouts is essential for complying with requirements such as IFRS and Sarbanes-Oxley (SOX). In addition to regulatory compliance, effective asset management can also help to ensure assets are insured at the correct level, to budget for maintenance and help to avoid unexpected asset ‘write offs’.

The practice of conducting periodic physical audits is the key to better managing an asset register. Physical audits are essential to clean up variances between what is being financially accounted for on the asset register and what is actually present. Whether the assets are maintained on a spreadsheet or on a specialist fixed asset system, the credibility of an organisation’s data and (the existence of assets and their Net Book Values) will be in question if it cannot verify them. 

A low cost physical audit can be easily conducted whereby barcode labels are attached to assets and a barcode scanning device used to scan the assets and inventory items. A hand-held unit uses an interactive display to guide the user through the audit process, continually updating the status of audited and unaudited items on-screen. By using a barcode scanning device such as the (Motorola MC55) and tracking software such as (Track4000) an audit can be completed in 80% less time than if manually completed by pen and paper.

In addition to time savings, the other benefits of using a scanner include better accuracy and the efficient updating of data. The use of barcodes can provide a much more accurate audit because they remove the inherent human error of incorrectly identifying assets. With the scanner, there is a confirmed electronic trail of items that have been scanned.

The data on the asset register will also be an accurate portrayal of what should be reconciled when producing an audit trail and will assist with meeting the financial reporting standards of IFRS and Sarbanes-Oxley (SOX). Lastly, it enables anyone to conduct the audit since the auditor is only scanning barcodes and does not require specialist knowledge to distinguish between different items that need verifying. 

By implementing a professional tracking and barcoding system, you will be able to maintain tighter control and management of your fixed asset register and ultimately reduce the time and money spent managing your asset base.

Real Asset Management is now on Twitter!

You can now follow us on twitter for the latest and most up-to-date information about IFRS, new white papers available , product launches and tips and tricks for managing your fixed assets.  Plus, be among the first to know when we’ve updated our blog posts for more in-depth asset management information. 

Whether you’re interested in asset registers or tracking software, there will be information relevant to you.  So, follow us today at www.twitter.com/RealAssetMgt  and tell us what you’d like to hear more about.

Maximising asset value for mergers and acquisitions

Merger and acquisition activity may be on the up but for many organisations now looking for a buyer, maximising value is a major challenge. And while cash rich companies are keen to expand where possible, no organisation wants to acquire a business that is likely to need unexpected investment in the current climate.

Yet with the majority of organisations still reliant upon spurious fixed asset data held in spreadsheets, achieving an accurate picture of the balance sheet and true profitability is proving a major challenge and a potential deal breaker.

Failure to put in place an accurate, up to date asset register could result in the company assets being significantly undervalued. It could also undermine the organisation’s ability to demonstrate strong cost control through asset reallocation and, with no asset maintenance history, a potential purchaser has no insight into asset health and the potential investment required, which could further reduce the price offered.

Non-organic business expansion may look strongly appealing in 2010 but with cost control under focus and a sustained reluctance to embark upon unscheduled capital expenditure, should any merger and acquisition activity really take place without a trusted, accurate audit trail of company assets?

Efficiencies for the Public Sector through IT

In a recent article published on Accountancy Age online titled ‘Public Sector FDs face formidable workload’ it was highlighted that spending cuts will mean jobs losses in the public sector and increased workloads for finance staff.

It can certainly be said that spending cuts will mean jobs losses in the public sector and increased workloads for finance staff, however public sector bosses must begin to consider ways in which operations can be streamlined and efficiencies optimised.

Applied intelligently, IT presents significant opportunities in helping public sector bodies prepare for lean times ahead. For example, implementing a robust asset management software solution can maximise efficiencies within the finance department through improved reporting functionality and increased automation in complex calculations such as asset value depreciation.

Promoting an accurate and centralised asset register can also improve inter-departmental communication and transparency, maximising business value, streamlining processes and allowing organisations across the public sector to achieve their full business potential through the prudent management of resources.

As well as enabling an organisation tighter control over operational costs and maintenance programmes, an up to date asset register also provides an accurate value of the asset base instantly. As public sector bodies seek to understand their ongoing health, relying on this information will become increasingly important.

There is little doubt that budget cuts and job losses poses a major challenge for the public sector. But, best practice, improved understanding and control over the asset register will enable organisations to make far more informed decisions about capital expenditure and replacement budgeting.