Real Asset Management Blog
13
May
Among the key short-term benefits of improved asset control is a potentially dramatic decrease in insurance premiums and property taxes. After performing thorough asset audits, Scholes said that RAMI’s customers have found that up to 20 percent of assets listed on an organization’s asset register are no longer in existence. Accordingly, their premiums may be considerably higher than they need to be and the company may be paying tens of thousands of dollars in property taxes on items that they no longer have. Poor asset descriptions and identification can also lead to denied insurance claims.
Tax depreciation strategies can also make a big impact on a company’s financials, Scholes noted. Taking advantage of tax treatments designed to help recoup some of the costs of infrastructure is essential to sound financial management, but can be a challenge with ever-chaning tax laws and the need to keep multiple books for state, federal, corporate and other purposes. Add to this the special tax treatments for particular items and organizations and it is nearly impossible to keep appropriate asset registers unless an automated system is used. Without such a system, not only are asset locations, descriptions and values likely to be incorrect, but the company is also likely to be missing out on strategies that could reduce its tax liabilities.
This is especially pertinent right now, according to professor Tecklenburg, since the new economic stimulus package that will be sending $600 checks to individuals also provides businesses with bonus depreciation for capital expenses. Bonus depreciation offers businesses an extra one-year boost in the amount they can deduct on capital expenses. Under this stimulus package, first year depreciation on capital equipment (purchased in 2008) has been increased to 50 percent of the original purchase cost, with a maximim of $250,000 write-off for companies with up to $800,000 on annual revenues. The remaining 50 percent will be depreciated over a business’ normal depreciation schedule. The Economic Stimulus Package of 2008 allows for similar bonus depreciation rules to those put in place following September 11, 2001, and in 2004 and 2005.
Leave a reply. Filed under Thought Leadership
07
May
With Financial Indicators Pointing Down, Technology Offers Ways to Improve Finances
Economic forecasts are increasingly pointing toward recession, a prospect not missed by executive management teams and the boards of many private and public entities who are exploring ways to proactively strengthen their financial positions in order to ride out the economic downturn. Among the strategies many of these organizations are taking is a move to more accurate and effective fixed asset management.
According to Don Tecklenburg, a Certified Public Accountant and assistant professor of accounting at Ohio Wesleyan University, proper asset management is a critical element of corporate accounting and responsibility, and the lack of it can put a business at risk.
“Fixed assets are often one of the largest line items on a company’s financials, yet they are often too loosely tracked,” he said. “Knowing where your assets are, what condition they are in, and having accurate descriptions of them, is crucial to not only tax depreciation strategies, but also to replacement cycles that, if not followed, can lead to down-time. This is true whether the assets are tech devices like computers and servers, production-focused equipment, vehicles or buildings.”
As a former chief financial officer at several private universities, Tecklenburg
knows not only the risks of poor management, but also the inherent challenges of keeping up with potentially thousands of items. “Financial managers often find themselves mired in a combination of spreadsheets and programs, but newer technologies have greatly improved asset management, providing not only proper compliance, but also instant reporting and analysis, automated depreciation calculations and planning tools.”
Marcus Scholes agrees. The vice president of U.S. operations for Real Asset Management International (RAMI) also sees that improved asset management can actually help strengthen a business, especially in advance of a potential economic downturn. “Improving asset management provides essential short-term cash flow benefits, as well as positive longer term advantages with regards to workflow processes, security and disaster management preparation,” he said.
“From a purely operational standpoint, having an accurate asset register that shows location, condition and the person responsible can help ensure that assets are available and usable when needed.” But how a business manages its assets also has multiple effects on the entity’s finances, through the very tangible costs of heightened insurance premiums, property taxes and neglected depreciation. Here are several ways that implementing an automated asset management system can help a business be more fiscally responsible and better able to withstand economic turns.
Has your organization taken action, in regards to improving fixed asset management procedures, during today’s economic downturn?
Leave a reply. Filed under Thought Leadership
30
Apr
Business Services Consultant to Implement and Resell RAMI’s Asset4000
BOSTON - April 30, 2008 - CBIZ (NYSE: CBZ), the nation’s leading professional business services consulting firm, and Real Asset Management International (RAMI), which develops software for optimizing fixed asset management, today announced an agreement that will enable CBIZ to enhance the services it provides clients by using and reselling RAMI’s Asset4000.
CBIZ is the largest benefits specialist and one of the largest accounting, valuation and medical practice management companies in the U.S.
“Asset management is a cornerstone of fiscal responsibility, touching on many critical areas,” said Marcus Scholes, Vice President of U.S. Operations for RAMI. “These include physical asset tracking, determining insurance premiums and property taxes, establishing proper valuation during litigation, mergers and acquisitions or when seeking financing, and for developing the most beneficial depreciation strategies.”
CBIZ will use Asset4000 in its Valuation Group, which provides financial advisory, valuation and litigation services. The group’s clients include school districts, municipalities, counties, insurance risk pools, private sector companies, hospitals and healthcare organizations. CBIZ will also offer Asset4000 to clients who have opted to retain asset management functions in-house.
“Asset4000 will provide bottom line savings for CBIZ and our clients because it will help us realize efficiencies by consolidating varying systems that were in use in different CBIZ offices,” says David Bowerman, President of CBIZ Valuation Group. “RAMI offers a single system that requires less training and internal support, enables us to set uniform policies and procedures, and also provides a consistent reporting platform.”
“With many organizations facing budget cuts, allocating the internal resources to maintain their property records accurately is becoming a bigger and bigger challenge,” says Kory Dogs, Managing Director of CBIZ Valuation Group’s Northern office. “Asset4000 will allow CBIZ to offer organizations a cost-effective means of keeping up with these critical processes.”
###
About CBIZ
CBIZ, Inc. provides professional business services that help clients better manage finances, employees and technology. As the largest benefits specialist and one of the largest accounting, valuation and medical practice management companies in the United States, CBIZ provides its clients with financial services including accounting and tax, internal audit, merger and acquisition advisory, and valuation services. Employee services offered by CBIZ include group benefits, property and casualty insurance, payroll, HR consulting and wealth management. CBIZ also provides IT, hardware and software solutions, government relations, healthcare consulting and medical practice management.
About Real Asset Management International
With over 3,000 client implementations in more than 70 countries, RAMI’s solutions enable businesses to determine and implement optimal accounting strategies, maintain compliance with federal and state taxation and perform asset budgeting and forecasting. The company’s solutions also cover lessee asset accounting, capital project control, document management, inventory control, asset tracking, help desk support and maintenance management.
For further information regarding CBIZ Valuation Group or RAMI, contact:
Lara Gangloff at (770) 858-4423, lgangloff@cbiz.com or
Isaac O’Bannon at (405) 818-6669, Isaac@wordsmithpr.com
Leave a reply. Filed under General News
29
Apr
In light of several, recent corporate accounting scandals, the United States enacted a federal law know as the Sarbanes-Oxley Act of 2002 (SOX). SOX enforces corporate governance and disclosure obligations for publicly traded companies in the U.S. This legislation sparked worldwide attention, especially from Canadian corporations with significant access to U.S. markets. Corporate governance regulators were soon under pressure to implement similar rules in Canada.
In order to develop effective regulations, Canadian officials conducted an analysis of the differences between financial markets in the U.S. and Canada.
Three major differences were identified:
1) Unlike the U.S., Canada did not have a national securities commission.
2) Contrary to the U.S., a significant percentage of publicly traded Canadian companies maintains a controlling shareholder.
3) Many publicly traded Canadian companies are significantly smaller than those in the states; therefore, U.S. SOX requirements would impose a considerable financial burden.
Outcome:
The Canadian Securities Administrators (CSA) created multilateral requirements, very similar to Sarbanes-Oxley guidelines, which adhere to Canada’s unique financial market. CSOX rules are as follows:
MI 52-109
Requires company executives, specifically CEOs and CFOs, to approve quarterly and annual financial reports to ensure accuracy and accountability.
MI 52-110
Expands on standards and rules for audit committees.
MI 52-111
Calls for companies to perform detailed internal testing of accounting processes in accordance with external auditor examinations. This particular rule will be phased in over a time period of four years, starting with financial years ending on or after June 30, 2007.
What does this mean to your company?
Leave a reply. Filed under Thought Leadership
27
Mar
RFID (radio-frequency identification) is the future and traditional barcoding will soon become obsolete. That’s the opinion of many these days…but is it a true statement? While RFID technology has been around for more than half a century, it’s only recently come to the forefront since the cost of scanning devices and tags have dropped significantly.
RFID technology theoretically allows you to walk into a room with tagged assets and inventory items and perform a complete physical audit in a matter of seconds. Travelling quickly from one location to the next, an audit of all fixed assets and inventory items - spread across numerous buildings, floors and rooms, is attainable within a very short time period. Yes, the technology used in RFID is certainly more expensive than conventional fixed asset tracking; however, many will argue that with the timesavings involved, ROI analyses favor RFID.
Q: So which is the better option: RFID or barcode scanning?
A: It all depends.
Your industry, company requirements and finances are just a few deciding factors to be considered in the decision making process.
If you have questions or comments on this topic or are simply interested in learning more about RFID vs. traditional barcode scanning, please post a reply.
5 replies so far, leave a reply. Filed under Thought Leadership
25
Feb
Growing risk awareness and recent natural disasters, such as Hurricane Katrina, have prompted an increasing number of companies to invest in disaster recovery (DR) as part of a business continuity program - but not all have followed suit. Given the growing acceptance that business continuity is an essential component of 21st century business, why are so many companies willing to compromise that investment from day one by failing to retain control over essential asset information?
Disturbingly, the majority of companies believe the asset register is, at worst, 5% inaccurate - and are therefore shocked when the results of a complete physical audit show it’s actually much worse. Discovering the true level of asset inaccuracy during a disaster recovery situation can create significant business problems. Any inconsistency in the asset register or inability to reconcile the asset value in finance with multiple inventory records will raise significant doubt for insurance companies, delaying payment at best. At worst, an organization could lose any chance of insurance payment and even face charges of claiming for items that do not exist.
Fixed asset management is a fundamental business process. It determines corporate value and has a direct impact on profitability. Yet, if forced to provide proof tomorrow, how many multi-national organizations could be confident in the value of their corporate assets?
Leave a reply. Filed under Thought Leadership
04
Feb
An organization’s insurance policy is derived from the value of its asset base. For example, manufacturing and distribution companies are typically asset-heavy, so insurance is a considerable overhead in that industry. With that in mind, many companies will still admit that their asset registers are not actually up to date. When a new fixed asset is purchased it’s usually recorded into the asset register, but then little effort is made to track the asset as it floats around the office from one department or building to another. Fixed assets are eventually sold or disposed of, even at that point, some companies don’t bother to update the asset register. What’s the end result? Companies end up insuring assets they no longer own.
The issue of poor asset management extends far beyond insurance premiums. What happens when a company has to file an insurance claim? Without an accurate asset register, it’s nearly impossible to estimate the value of what’s been lost in a disaster recovery or theft situation. When the assessor comes across a 20-year-old PC on the fixed asset register, they’ll be quick to scrutinize every other item. What’s the end result? Worst-case scenario, the insurance company will refuse to pay the claim.
The asset register has a tremendous affect on a company’s value. Failure to ensure proper fixed asset management means finance directors and internal auditors are not adhering to corporate due diligence.
For further information surrounding this issue click here.
3 replies so far, leave a reply. Filed under Thought Leadership
|
|
