Asset Management:

Best Practices for Small & Mid-sized

Businesses

December 6, 2007
Session Objectives

Understand the impact fixed assets have on a

company’s financial statement
See how utilizing the integration of Red Moon
Solutions’ Fixed Assets Manager (FAM) with SAP
Business One can help you achieve maximum
accounting benefits
Review FAM’s intuitive interface and comprehensive
tax calculations, which ensure a company is
compliant with all IRS rules and regulations
Learn best practices used by other companies in
tackling asset management

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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
– eTaxCalendar ™ - web-based tax calendar
– eTaxPortal ™ - SaaS collaboration workspace, including
workflow and document management
– 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

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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)
 What are small businesses saying?

“We can’t get the fixed asset

information we need from our
accounting system.” “Were there asset dispositions
we didn’t know about?”

“I spend too much time trying to

keep track of fixed asset data
and calculations in Excel.”

“We do not know where our

fixed assets are located.”

“It takes too long to provide

required information to the 5

different stakeholders.”
Asset Management Challenges

Lack of controls and validation in Excel

– Complicated calculations & formulas must be created
– Lack of change control

Difficulty tracking asset transactions

– Dispositions
– Transfers

Poor asset data management

– Missing asset locations, cost centers
– Different acquisition vs. in-service dates

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Impact on Financial Statements

Incorrect profit & income tax

– Continued depreciation on books for disposed assets

Incorrect property tax

– Unrecorded asset detail for classifying property

Incorrect insurance costs and inadequate coverage

– Paying for disposed assets
– Missing new purchases

Poor purchasing decisions

– Duplicate assets acquired

Poor SOX compliance

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– Inadequate controls and processes
 Financial Example

Number of Assets 1,000

Average Cost per Asset $500
Total Original Cost of Fixed Assets $500,000
Total Cost of Assets Lost or Unaccounted For $75,000 15% of total cost
Assumed Corporate Tax Rate 35%

Estimated Federal Income Tax Overpayment $13,125 37,500 X 35%

Potential Property Tax Overpayment $2,250 3% of asset cost
Potential Insurance Overpayment $750 $1 per $1,000 rate
Total Loss Per Year $16,125

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Overstated adjustments, deductions, exemptions
and credits compromise up to $30 billion per year in
unpaid taxes, according to IRS estimates.
-IRS FS-2006-27
November 2006
 Demonstration:
SAP® Business One
&
Fixed Assets Manager

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 1. Order is placed in Business One
with one or more items flagged as
fixed assets

Fixed
Asset 1

2. Order Arrives. Now there is an

account payable for the fixed asset
4. Track depreciation over time. As time passes,
FAM generates Journal entries for depreciation of
fixed assets which are posted to the General Ledger

Fixed Asset 1

3. The fixed asset must also be

recognized and tracked in FAM
Best Practices

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People

What are the key issues?

– Asset acquisitions
– Tracking disposals and transfers
– Properly classifying assets
Who owns the process?
– Accounting
– Fixed Asset custodian
– CPA (Tax)
Who is committed and willing to do the work
required to improve the process?
What training and education is in place to support
them?

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Process

Evaluate your current state

– How are fixed assets recorded today?
– How are dispositions and transfers tracked?
– What are the standard or unique asset events that
provide the most risk of failure?
– What processes and procedures are in place to ensure
regulatory compliance?
Model your future state
– What can be done better?
• Tracking assets by location
– How can risk be minimized?
– What don’t we have today that would make it easier?
• Better reporting

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Technology

Do you have the infrastructure to support the

solution?
– System requirements
What solution is right to address your issues?
– Asset depreciation for book & tax
– Robust search and ad-hoc reporting capabilities
– Ability to generate fileable tax forms
– Simple data conversion techniques for existing assets
– Ability to slice and dice your data for analysis
– Ability to get your data out easily to provide reports to
stakeholders and/or to respond to audit
Can the solution be easily deployed and maintained?

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 Managing Fixed Assets for Maximum Bottom-line Impact

Time Spent on:

HIGH VALUE
Strategic ASSET
MANAGEMENT
Activities

ENABLE STRATEGIC PLANNING

REDUCE COSTS

LIMIT AUDIT STREAMLINE

EXPOSURE COMPLIANCE

Compliance
Activities 16
MANAGE ASSET LIFECYCLE
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)
What Are Next Steps?

Select champion or process improvement owner

Take time to review current state

Analyze requirements, goals and objectives

Create ROI and/or business case

Secure budget and implement sooner rather than

later!!!!!

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 Thank you for joining us today.
If you have additional questions or for more information, contact us at:

(941)379-7106

www.redmoonsolutions.co
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