Category Archives: White Papers

The 9 Lives Advantage for Best-of-Breed Fixed Asset Software

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It’s easy to kill the decision to purchase a stand alone fixed asset software package when your Accounting or ERP system already contains a similar module.

Or is it?

A best-of-breed software solution like Bassets eDepreciation offers many advantages and a complete project analysis will ensure its’ survival.

Vendors like Oracle, SAP, Microsoft, Epicor and PeopleSoft offer excellent ERP systems with a limited fixed asset module. Some of these modules only handle Financial Book while a dedicated package can offer additional schedules for IRS, AMT, State, ACE and Earnings & Profit. This is one example of the limitations usually found in these narrow offerings. Now let’s compare a best- of-breed solution and look at nine advantages:

  1. Easy implementation
  2. Feature Rich
  3. Industry Specific Functionality and Optional Modules
    1. Exchange data with other software packages
    2. Track supporting detail
    3. Provide Alternate Calculations
    4. Non-standard Calendar
  4. Minimize the risk for functional gaps in the future
  5. Interface options
  6. Easily handle special requests and unique requirements
  7. Experts in the field
  8. Not locked into a single ERP vendor
  9. Robust technical support

So if you perform your complete due diligence I think you will agree that best-of-breed software does offer many advantages. Before killing this critical decision and going for what looks to be the easy route, please consider these nine lives. Don’t just settle for “good enough”.

This modified version of a White Paper is intended to give you an overview of the advantages to choosing a stand alone-asset software vs. an all in one solution. You can find more detailed version, including a useful comparison chart, on the Bassets White Papers page.

Questions or comments about this post? We invite you to respond in the space below.

More information about Bassets eDepreciation software can be found at Bassets.net. While there you can set up a demonstration, download a free evaluation copy and get a personalized pricing estimate.

A Hole in Your SOX Compliance

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While most corporations believe that their SOX Compliance Issues are behind them. A great many of those companies are finding upon more in depth analysis that their fixed asset depreciation software or spreadsheet has a hole in their SOX Compliance.

There are many internal controls that are required for a fixed asset depreciation process to be SOX Compliant. A fixed asset depreciation software or spreadsheet should at least provide the ability to:

  • Validate that the complex combinations of depreciation methods, conventions and recovery periods are entered correctly.
  • Accurately represent that the assets on the books actually exist with an annual physical inventory.
  • Provide Comprehensive application data security.
  • Generate an audit trail that tracks ALL data changes

Here we provide an example of the problems inherent with the input of of complex data entry:

Problem: Typical accounting entries are for either an income or an expense item and the data entry requirements are very basic. The data entry consists of a date, a dollar amount, the correct general ledger code and the source of the income or expense item. When it comes to the data entry for a fixed asset, the same basic information is required. However, additional more complex information is also required such as Depreciation Method, First Year Convention, Recovery Period and Property Type. Additional general ledger codes are required for journal entries like Accumulated Depreciation and Depreciation Expense. Also additional general ledger codes that may be required such as Cash and Capital Gains/Loss Construction in Progress. You may also need tax related entries like Section 179 Expense, Bonus Depreciation, Qualified Leasehold Improvements and Luxury Automobile just to mention a few.

The SOX Compliance problems for most fixed asset depreciation software packages begin with the basic depreciation information. During data entry, most fixed asset systems do a poor job of error checking and validating the basic depreciation information that is entered into their software. This results in one or more of the four basis depreciation elements being entered incorrectly on a routine basis. Now add in some of the more complex tax regulations as mentioned above and the level of complexity rises.

While an asset record entered with the incorrect depreciation method and/or recovery period will calculate depreciation based upon the information entered, the resulting calculation will not be in compliance with IRS Regulations or SOX, since one or more of the depreciation parameters was entered incorrectly.

Solution: For a fixed asset depreciation software package to be Sox Compliant, the software would have the user enter the basic fixed asset information:

  • Date of acquisition
  • Dollar amount
  • Appropriate asset general ledger code

Once this basic information has been entered, the SOX compliant fixed asset depreciation software package would automatically enter the remaining, more complex information. This process removes the “Human Element” that results in the basic depreciation information being entered incorrectly. The software package should also assist the data entry personnel with the more complex tax regulations that apply to a small portion of a company’s assets.

Do not allow your fixed asset depreciation software to be a hole in your SOX Compliance.

 

This modified version of a White Paper is intended to give you an overview of the potential issues you may run into if your fixed assets software is not SOX compliant. You can find more detailed version, including in depth analysis and examples for all of the internal controls we listed at the beginning, on the Bassets White Papers page.

Questions or comments about this post? We invite you to respond in the space below.

More information about Bassets eDepreciation software can be found at Bassets.net. While there you can set up a demonstration, download a free evaluation copy and get a personalized pricing estimate.

Calculating ROI for a Fixed Asset Software Package

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Fixed Asset Software sometimes does not get the attention it deserves. Some companies will utilize spreadsheets to track fixed assets and perform depreciation calculations. While spreadsheets can certainly perform complex calculations, they are prone to formula errors and are not the best solution for asset management. A better approach is to select fixed asset and depreciation software that is specifically built for this complicated accounting function. For additional information, read my white paper “Evaluating Fixed Asset Management Software.”

When you have decided to convert from spreadsheets or upgrade your existing fixed asset software, you can choose from a number of asset management solutions. First, you will need to get an approval for the software purchase from your management team. The best approach for justifying the cost is to make a solid business case by calculating Return On Investment (ROI). The purpose of this document is to help you determine the current costs associated with managing your assets and then project potential savings and benefits of an improved solution.

In order to calculate ROI, there are four basic steps involved (see Diagram below). First, perform a need assessment. This can layout any problems with the spreadsheets or your current system. This is also a good place to establish potential benefits of a new fixed asset software package. Second, establish benchmarks of the current monthly and annual processing of fixed assets. Third, define what technology, operational and economic value can be found in a new system. Fourth and finally, present your findings to management with projected savings and intangible benefits that show purchasing new fixed asset software will easily return the cost of purchase in a short period of time.

Once you have performed these steps  you are will be armed with the information you need to present your findings to upper management. Use the benchmark calculations as a starting point. Review these numbers and determine how much time and money will be saved with an improved fixed asset management system.

In addition, you need to present the other “value” improvements. While it is difficult to put a dollar amount on some of the intangible benefits, they can have a powerful impact on gaining management approval.

 

This modified version of a White Paper is intended to give you an overview of how to calculate the ROI for a new fixed asset software package. You can find a more detailed version, including including how to’s on each of the four steps and a handy ROI calculator, on the Bassets White Papers page.

Questions or comments about this post? We invite you to respond in the space below.

More information about Bassets eDepreciation software can be found at Bassets.net. While there you can set up a demonstration, download a free evaluation copy and get a personalized pricing estimate.

 

4 Steps to Selecting a Fixed Asset Solution

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Managing the complex and ever-changing calculations for the depreciation and amortization of assets is a difficult challenge. Finding the best solution among all the fixed asset software products available on the market today can be equally complicated. Each product offers a wide variety of features and the purpose of this document is to help you with the challenges of software evaluation. Selecting the right package for your organization has to be based on the unique needs of your company.

Step 1: Define Your Requirements

In order to determine the requirements, review your current fixed asset system or spreadsheet(s):

  1. How many assets are you currently tracking?
  2. How many assets will you be adding by month/year?
  3. What depreciation methods and conventions do you use?
  4. Do you need to summarize groups of assets?
  5. What reports are you currently generating?
  6. Do you need to track multiple companies?
  7. Do you need to exchange data with other systems?
  8. Are there any unique functions or features in your present package?
  9. Do you need a security module to limit access?
  10. How much are you willing to spend for a fixed asset solution?

 

Step 2: Measure Potential Solutions

An essential part of such an undertaking is evaluating the commercial products that are available to determine their suitability for use in your company. Virtually all organizations perform an evaluation of fixed asset software products before using them, but still some projects fail. It is critically important that the features of the system match your unique requirements. Here are some important areas to review.

  1. Conversion Flexibility, Software Help & Support
  2. Asset Entry Customization, Automation & Error Checking
  3. Methods & Conventions, calculations for different periods
  4. Asset Filtering/ Sorting capability
  5. Standard & Custom Report writer availability
  6. Multiple Database/Client
  7. Data Exchange flexibility
  8. Features like: CIP, 445, G/L Interface, Barcode Inventory
  9. Security Access, Limitations, Restrictions, Rights & Groups
  10. Price & Value

 

Step 3: Test Drive Product Demos

Once you have narrowed your selection to two or three products, you should take each for a test drive. The diagram below shows simple steps on how you can start your Test Drive.

Most packages offer a demo copy of their software on a cd or as a download from their web site. Contact each vendor and put the package through its paces. This emphasizes a “hands-on” technique that allows you to collect results by actually running the different fixed asset packages using the same test data.

  1. Is the software easy to install?
  2. Compare the Tutorial, User’s Guide and on-line Help of each package.
  3. Set your client preferences & try to configure some user definable fields
  4. Enter several test assets Run some sample calculations for different periods
  5. View multiple assets
  6. Print & review the most important reports
  7. Export some data to Excel Look at any optional modules that you need
  8. Try the security module
  9. Call Technical Support and ask a few questions

Step 4: Compare & Analyze Your Results to Make Your Purchasing Decision

Now that you have actually tried the available software packages, you can make an educated purchasing decision. Go back over your notes in the comparison chart and rank the products. At this point, you should have a clear leading choice. If you are still undecided and find two packages very close, request proposals from the vendors and compare their pricing. Speak with the sales representatives and ask for references. As you go through the proposals and speak with references, one of the packages should emerge as the right fit for your company.

This modified version of a White Paper is intended to give you an overview of the steps you should take when selecting a Fixed Asset Solution. You can find more detailed version, including a useful comparison chart, on the Bassets White Papers page.

Questions or comments about this post? We invite you to respond in the space below.

More information about Bassets eDepreciation software can be found at Bassets.net. While there you can set up a demonstration, download a free evaluation copy and get a personalized pricing estimate.

A Guide To Basic Depreciation Calculation

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The tax laws and accounting standards that apply to the depreciation of business assets can be complex, confusing and difficult to decipher. This guide to basic Depreciation Calculations has been developed to make the complex task of depreciating your business assets as easy as possible. This will also assist you in understanding the basic concepts of depreciation, as well as, the methodology used by The Bassets Fixed Asset System to enter depreciation information and perform required calculations.

The information required for the depreciation calculations are as follows:

  • Property Types:  In general, depreciation is allowed on tangible and intangible property with a limited useful life of more than one year that is used in a trade or business or held for the production of income.
  • Service Date:  IRS rules define when an asset is placed in service and depreciation of the asset may begin. An asset is considered to be placed in service when it is first placed in a condition or state of readiness and availability for a specifically assigned function.
  • Useful Life:  Depreciation is allowed on tangible and intangible property with a useful life (Recovery Period or Amortization Period) of more than one year.
  • Cost Basis:  The basis is equal to asset’s purchase price. You may need to make some adjustments, under a number of different circumstances.
  • Depreciation Methods:  The Tax rules allow various methods to depreciate assets, including MACRS — Modified Accelerated Cost Recovery System and SL — Straight Line.
  • First Year Conventions:  When a piece of property is placed in service, you are required to use a particular convention to determine the depreciation deduction you will get for the first year.

This modified version of a White Paper is intended to give you a better understanding of the basic depreciation concepts. You can find more detailed version, including a comprehensive example, on the Bassets White Papers page.

 

More information about Bassets eDepreciation software can be found at Bassets.net. While there you can set up a demonstration, download a free evaluation copy and get a personalized pricing estimate.