Archive for Opinion

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.

Concerned about the integrity of your fixed asset data when using spreadsheets?

Total control over your fixed asset management data simply cannot be achieved through the use of a spreadsheet. Whether a user input error or unintentional miscalculation, inaccuracies within your fixed asset register are inevitable. With that said, how can you be 100% confident in the integrity of this vital data? A specialist system will have strict security features in place to effortlessly address the issue.

Furthermore, entering and maintaining asset data becomes an endless task when working within the parameters of a spreadsheet. A specialist system will automate the entire fixed asset management process. From data import capabilities to automated reports and forecasts, a significant amount of valuable time can be shaved off the entire process.

RECOMMENDATIONS AND ADDED BENEFITS
While the spreadsheet is an integral part of business operations, it cannot perform all the tasks businesses face. And while the importance of tracking and monitoring fixed assets is often overlooked, the return on investment that can be attained by maintaining a current inventory and properly accounting for fixed assets in a “best of breed” solution can be substantial. By implementing a dedicated asset inventory and asset accounting solution, companies can achieve many benefits.

As a part of a broader fiscal strategy, the move to more accurate and effective asset management can be invigorating to a business, providing essential short-term cash flow benefits as well as positive longer term advantages with regards to workflow processes, security and disaster management preparation.

One of the most tangible ROI realisations for businesses that implement such a system can be a dramatic lowering of insurance premiums and more successful insurance claims. These result from having a more accurate knowledge of assets that may no longer be on the books.

Automated fixed asset management systems are integral to responsible financial management, providing more accurate financial statements, streamlining workflow processes and helping businesses take full advantage of available tax benefits.

The public sector is facing up to IFRS and seizing the opportunity to utilise the asset register to maximise business benefits.

In a recent article published on AccountingWeb titled ‘Consultation launched for new IFRS council accounting code’, it was confirmed that CIPFA/LASAAC, the board responsible for the introduction of international financial reporting standards (IFRS) in local authorities has begun a consultation on the IFRS-based code of practice on local authority accounting.

It’s true that the new IFRS reporting complexity combined with an extraordinary increase in asset numbers does present a series of challenges to financial departments. But the new standards will in time offer tangible business benefits and increased cost efficiencies which will make any disruption caused during this transitionary period, as organisations completely readdress their asset register requirements, seem like a very necessary catalyst leading ultimately to a far more productive time.

A centralised, automated asset register is key if Public Sector organisations are to reap the maximum benefits. This vital tool will not only streamline year end audits and reduce the reliance on specific, skilled personnel but will also provide the detailed insight into corporate assets required to enhance capital expenditure decision making and improve Local Authorities’ Comprehensive Performance Assessment (CPA) scores.

There is little doubt that the shift to IFRS 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 – decisions that will have a measurable impact on CPA scores and audit reports.

Once established, this new set of standards will offer an astonishing level of visibility throughout the fixed asset register, maximising business value, streamlining processes and allowing organisations across the public sector to achieve their full business potential through the prudent management of resources.

Cost savings still the priority in green IT, says Forrester

Financial drivers and efficiency gains key factors but IT directors must be careful not to go too far, says analyst Written by Tom Young Computing, 05 Oct 2009

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 will have 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.

UK firms unprepared for disaster, IDC warns. Does your business have a DR plan?

BT-commissioned research reveals the UK’s largest firms are still lacking when it comes to business continuity provision (article written by Sara Yirrell, CRN, 4th March 08)

Growing risk awareness and an increasingly dangerous business environment may have prompted more companies to invest in disaster recovery (DR) as part of the business continuity programme – but how safe is that investment?

Just what, indeed, is being recovered? Few organisations have any real insight into the true extent of their IT assets. Not only does this challenge the validity of the DR solution but it also raises huge questions in the event of an insurance claim.

For most companies, one of the major issues is the complete lack of co-ordination between the asset register recorded within finance and the inventory lists used within the IT department to determine system maintenance and support.

Any inconsistency between the asset register held within finance and other inventory records in the business will raise significant doubt for insurance companies, delaying payment at best. At worst an organisation could lose any chance of an insurance pay-out, even face charges of claiming for non existent items.

However, there are simple processes that can be followed to ensure greater information consistency. A central repository that records the serial number and asset location, as well as the value of each item, will meet the needs of all departments from finance to IT.

Critically, this ensures that reliable, accurate information is available for both insurance and DR planning, reducing business risk whilst also giving companies more confidence in their business continuity investments.

Small businesses ignorant on WEEE – is yours one of them?

A year after the laws came into force, most businesses still don’t know they exist (article by Tom Young, Computing, 12 Feb 08)

The Waste Electrical and Electronic Equipment (WEEE) Directive may be touted as a cost for suppliers, but unless organisations get their asset registers in order, it will also create a significant cost for UK business.

Such policies as WEEE assume a level of asset management far beyond that achieved by the majority of UK business. Unless supplying a like for like replacement, suppliers will only remove and dispose of equipment they have delivered initially. 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? Without such information, just which company do they expect to handle the free disposal?

Organisations need to implement sound asset disposal procedures. Linking the asset register to a document management system will ensure a scanned WEEE certificate is linked to a disposed asset, providing the required audit trail. Each asset can be recorded alongside the supplier’s name and email address, enabling swift supplier contact when disposal is due.

UK business is already complaining about excessive red tape, perhaps why the WEEE Directive introduction in July 2007 was so downplayed. But a belief that the onus of WEEE is firmly on equipment suppliers could be an expensive mistake.