Automating Your Fixed Assets Lifecycle

Automating Your Fixed Asset Lifecycle

Objectives

• Upon completion of this session, you will be able to:– Understand how you can integrate with a financial system (ERP/GL),

calculate book and tax depreciation as well as reconcile from book to tax– Understand how you can automate the tracking of fixed and intangible

assets, calculate appropriate depreciation, and remain in compliance for tax compliance and reporting purposes.

– Understand how you can streamline your apportionment, federal and state E-file requirements, property tax declarations and international assets.

– Understand how you can integrate with Vertex- Income Tax.– Understand how this tool can facilitate your operational and tax planning

and responding to enterprise-wide requests related to your asset data.

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 Business Intelligence

Solutions– ARMS ™ - Actuarial Risk Management Solutions– 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

65% of fixed asset data is incomplete, inaccurate or altogether missing, a potential disclosure risk for executives now responsible for certifying the accuracy of financial data as a result of Sarbanes-Oxley compliance.

- Asset Management Resource (AMR)

Financial System Integration

Financial System Integration Challenges

• Need for tax department to involve IT• Disconnect between Accounting & Tax departments

– No knowledge of timing for additions, retirements, transfers– Asset data modifications

• Financial system data is inaccurate or incomplete• Required manual manipulation of financial system data for

tax purposes • Use of Financial system for both book and tax depreciation

for fixed assets

Pitfalls of Using Financial System for Tax Depreciation

• Lack of controls and validation when tax data is entered• Tax law updates are not maintained by vendor• Costly to maintain for tax purposes

– Tax law maintenance– Custom tax reports– Consultants

• Inadequate reports and forms for tax compliance • Lack of vendor experience in tax technical issues,

implementations and support for fixed assets

Options for Integrating Financial System Data

• Data export from Financial system on a monthly or quarterly basis Import into Fixed Assets Manager– Additions– Retirements– Transfers– Asset Updates

Cons: Requires initial IT assistancePossible file manipulation for tax mappingNot fully automated

Pros: Data reviewed by tax prior to import into tax system Ability to make adjustments to incorrect tax data/catch mistakes earlierMore cost effective


• Use of an intermediary data repository for all tax-related data coming out – Vertex Tax Data Repository (TDR)– Data Mart

Pros:Easier access to all compliance data for reporting/planning Real-time access to data

Cons: Requires more ongoing IT assistanceCan be expensive – consulting fees

Tax View – Tax Data Repository

Business or Tax Intelligence Solutions

Tax Intelligence Platform

Financial Systems

General Ledger

Fixed Assets

AnalysisDashboards

Web Data Collection

Tax Data Repository

Query & Reporting

Planning

Spreadsheets

Audit Traceability

Executives Tax Finance

Fixed Assets Manager

Domestic Income Tax

International Compliance

Tax Data Integration Hub

Workflow

Estimates Payments

Tax Adjustments

Provision


• Complete automation of data moving from Financial System into Fixed Assets Manager

Pros: Complete automation of data Less error prone – tax validation enforcedProcess improvement

Cons: Requires consulting/vendor expertiseLong implementation timeCan be expensive

Demonstration:SAP® Business One

&Fixed Assets Manager

Fixed & IntangibleAsset Tracking

Demonstration:Fixed & Intangible

Asset Tracking

Incorrect information and errors in fixed asset inventory data are a near universal problem – resulting in significant and unnecessary tax

overpayments of 8% to 20% - Asset Management Resource

(AMR)

Streamlining Apportionment, Property Tax, and

International Asset Tracking

Sample Fixed Asset Workflow

Book Type Setup

Foreign(Great Plains)

LS

Tax(FAM)

Financial System

Initial Asset Entry(Detail)

Asset Retirements

Summary Asset Data File

(XLS)

Property by State(XLS)

Foreign

Quarterly Provision

(XLS)

Estimated Payments

(XLS)

Tax Calendar(XLS)

RestrictedShared

FileServer

Depreciation Reports & Forms

Import Asset Data(Summary)

Manual breakdown,

allocation and manipulation

Domestic Compliance(Manual Input)

State Compliance(Manual Input)

Property Tax Declarations

(Manual Forms)

Future Fixed Asset Workflow

Book Type Setup

Workflow/Doc MgmtFAM - Accounting& Tax

Generate & Integrate

WORKFLOW:

Quarterly Provision Estimated Payments Compliance Reporting Audit Planning

Provision

Software

Fed/State Income

Tax Software

Data Integration Detail, Summary & ALL Filings

FAM™

Property Tax

Declarations

Fixed Asset Challenges

• Location tracking both domestic (state & city) & foreign:

– Custom views– Report grouping– Search capabilities

State ApportionmentState Apportionment

• Location tracking both domestic (state & city) & foreign:

– Custom views– Report grouping

• Improve accuracy of disposition & transfer tracking

Property TaxProperty Tax

• Track data by foreign location• Units for depreciation tracking• Reporting in any currency• Add-on module for currency

conversions

InternationalInternational

• 40+ standard reports & fileable forms• Custom reports• Add-on module for analytics and

planning

ReportingReporting

Income Tax & E-File

Fixed Asset E-file Requirements

Lifecycle Automation

Tax Ecosystem: Driving Information Requests

Tax Department

Auditors

Accounting:FASB

Regulation:SEC

Tax:IRS & States

Internal Customers:CFO/CEO

What are tax departments saying?

“We can’t get the information we

need from our tax systems.”

“I spend too much time trying to manipulate data in Excel because standard reports

don’t meet my needs.”

“It takes forever for IT to respond to our requests.”

“It takes too long to provide required information.”

“We do not have enough time to focus on tax planning and

managing tax risk.”

Multi-dimensionality

entity

ass

et c

lass

location

entity

ass

et c

lass

actual/forecast

location

period

assetclass

entity

How will OLAP improve fixed asset reporting?

• “On-the fly” flexible analysis of real-time data• Unlimited number of reports – “slicing & dicing”• Replace many static spreadsheets with one multi-

dimensional cube for slicing• Reduce time spent manually manipulating and

massaging data in Excel• Free up resources for planning & strategic decision-

making

Information is a company’s greatest asset

90% analysis; 10% crunch

• Enterprise solution– Robust & scalable

• Cost effective– Fast ROI – measured in days & weeks– Low total cost of ownership (TCO)– 5-user license fees at $10,000 or less– Implementation time as short as a few weeks

Leverages investment in Excel knowledge– Security-enabled– Reduces sheer number of spreadsheets

maintained through data sharing

How do you & your company benefit?

Contact Information

Thank you for joining us today.

www.redmoonsolutions.com