2008 Review of Fixed Asset Management Systems

First of all, using spreadsheets is extremely time consuming, and the annual
barrage of tax law and depreciation changes, such as special bonus depreciation
rules, make keeping up with the issues even more demanding. For clients who
have an in-house bookkeeper managing this spreadsheet, there is also the risk
of this one person with knowledge of it parting ways with the company and leaving
the customized and likely complex set of macros for somebody new to try to figure
out.

Secondly, managing fixed assets is much more than just an issue of properly
depreciating these items. Asset management programs offer a varying degree of
additional functions, from asset budgeting and capital management, to tracking
physical location and responsible party, to managing maintenance schedules and
speeding asset audits. An effective asset management system also provides consistency
of asset information because, instead of having multiple lists and registers
(an asset register for depreciation handled by the financial department, an
IT asset list and a maintenance list), a singular program and database can be
used for all of these divisions, with users only seeing the aspects they need
to do their job.

Speaking of asset audits, a study by the New York State Society of CPAs showed
that 15% to 25% of entries on corporate asset registers are missing; other studies
have shown this number to be as high as 40% when including items that are poorly
described or unidentifiable. These “ghost assets” directly result
in inflated insurance and property tax burdens for a business, since it is paying
premiums and taxes on items that may not be in existence. Furthermore, if an
insurance claim is necessary, inadequate asset records may not stand up to the
scrutiny of insurance adjusters.

While a myriad of business issues affect asset management strategies, depreciation
functions generally remain the key area of focus for many financial managers.
The programs included in this review all provide automated calculations that
conform to the latest depreciation laws and GAAP standards, while a couple of
the systems also offer IFRS guidance, which is likely to be enforced in coming
years.

Asset depreciation and management systems vary greatly in pricing, based largely
on the level of support they provide for asset base sizes, reporting functionality,
compliance issues and analysis capabilities. But another key differentiator
is the added features some of the systems offer for managing other asset issues,
such as life events, location tracking and inventory. Also of note is the integration
capabilities offered that can allow export of data into accounting, trial balance
and tax preparation systems.

The right system for either an individual business or for a professional serving
many business clients is greatly dependent on taxation issues that affect them,
the complexity of their asset bases, and the specific features and reporting
capabilities they require. If you or your clients are still using spreadsheets,
it’s definitely time to move to a dedicated asset management sys-tem,
but it is imperative to take the time to identify your actual needs.

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