Acquire-to-Retire Discussion Document

Transcription

1 Acquire-to-Retire Discussion Document

2 Drivers Changes are prompting financial executives to take another look at their assets based on a variety of reasons: M&A activities Revaluations Validation of existence and Integration of systems Nexus Cost cutting measures Tax impacts of asset values, depreciation and locations Potential insurance savings Automation of data collection Inefficiencies Manual activities impacting days to close Disparate systems creating problems in accuracy and availability of data Lack of asset tracking tool, processes and procedures requiring attention 1

3 Drivers, continued Inaccuracies in reporting Unreported asset transactions Ghost assets requiring identification Business unit, regional and departmental requirements Product costing inaccuracies Tax & MD&A s Inaccuracy in CIP balances Processes and requirements issues Capital expenditure processes Policies & procedures require updating Authorization limits and thresholds require updating Project tracking needs to be addressed Accounting treatment requiring clear definitions 2

4 Drivers, continued Systems do not support needs Project management system integrations Fixed asset systems require updating/integration Data collection tools require updating Controllers lose sight of what assets they actually have Physical inventories required (cycle counting) Asset tagging/identification process & procedures required Accuracy and/or reliability of data needs improvement Market values require updating 3

5 Acquire-to-Retire Life Cycle The Acquire-to to-retire life cycle encompasses activities from pre-acquisition through retirement Pre-acquisition processes Acquisition processes Monitoring & tracking Financial and statistical reporting Processes require significant data collection and manual intervention Multiple sources of information Non-automated activities 4

6 Processes & Activities Pre-acquisition Acquisition Monitoring & Tracking Reporting Capital expenditure requests Justification requirements Project approvals Project tracking Capitalization governance Purchasing requisitions Purchase orders Receiving Disbursements Approval processes Capital & expense distribution Asset identification Data collection Data entry Asset transfers Disposals Status changes Other significant activities Depreciation and amortization BU, Country, regional balance sheet & P&L Product costing MD&A Tax Analytics Market values 5

7 Pre-acquisition Processes Pre-acquisition Processes and systems utilized in the pre-acquisition include budget/planning, Project Management processes and the Purchasing processes. Pre-acquisition phases include the process of Capital Expenditure requests and approvals which Utilize project tracking methodologies Utilizes CapEx policies & procedures es CaPex Follows Capital & spending authority limits And follows Capitalization/depreciation rules Budgeting/ ahhoc requirements CaPex Request Approval/ authorization Polices Review & approvals Purchase order requisitioning Purchasing Project Management module The CapEx process normally defines - Authorization levels and information required for the approval process; Capitalization policies and procedures; Initial departmental/business t unit ownership Systems/applications Governance/Polices & Procedures Activities Common Issues Lack of CapEx policies & procedures Outdated authorization matrices Lack of adherence Lack of project tracking tools Accounting treatments not clearly defined Lack of accountability 6

8 Acquisition Processes Acquisition The acquisition process in normally when the fixed asset subsystem gets populated. Typically though, records are summarized into the general ledger and manually researched to be entered into the fixed asset modules. Purchase order processes Data from this process can be used to pre-populate assets subsystems and project management. Requisition data Vendor and asset information Asset information Purchasing including the approval of purchase orders Can be used for project tracking Can be used to compare against authorized project expenditures (automated t controls) Used to track commitments (open PO s) Receiving process is typically the process in which the data is captured into Accounts Payable Data from A/P transactions are used to populate the fixed assets module (quite often manually) Receiving documents should contain vital information such as serial # s, model # s and very distinct descriptors and can be automated to populate required fields. Approval/ authorization Polices Purchase order processing Project Management module Receiving Validation and data collection Purchasing Systems/applications Accounts Payable Governance/Polices & Procedures Activities Common Issues Non-standardized requisition processes Lack of integration with A/P and project tracking Incorrect accounts being utilized Asset data not being captured Detailed asset information not available General Ledger Fixed Assets 7

9 Monitoring & Tracking Processes Monitoring & Tracking Data collection and monitoring are the most data intense portion of Acquire-to-Retire. These processes require specific data about individual assets or asset groups as well the activities that take place. Data Collection phases normally require the most manual activity. This is due to the fact that much information is not available. A/P records Divisional/department asset activities Disposals Transfers Maintenance (if tracked) Asset Capitalization Policies Data collection BU, Regional reporting Validation and adjustments Accounts Payable Systems/applications General Ledger Fixed Assets A/P close process will generate additional fixed asset activities which will need to be included in the fixed asset module. Divisional/department submissions include asset activity that has occurred but need to be taken into consideration throughout the month. These should be standardized reporting methodologies. Governance/Polices & Procedures Activities Common Issues Multiple disparate systems Summarized A/P activity requiring research Lack of asset movement reporting Lack of physical inventory policies & procedures Business units not adhering to corporate requirements (Silo s) Lack of reporting capabilities 8

10 Reporting Processes Reporting The monthly close and reporting process is normally automated within the fixed asset system. Validation processes as well as data flow processes should be in place to capture any activities. Reporting includes the generation of reports for internal and external customers. Reporting requirements include: Data use for Tax reporting Data used for MD&A s Data used by Divisions for inventory tracking Data used for product costing Data used for tracking The monthly close process requires the updating of the Fixed Assets module for activities such as CIP completion; Disposals; Transfers; Additions; Reclassifications ; Reconciliations; Roll forwards Monthly Close Schedule/Task Lists A/P monthend close Data transfer Common Issues Fixed Assets Non-integrated systems Asset reporting inadequate for needs Validation of calculations not being performed Results not shared with Tax or BU s Reconciliation and roll forwards not being performed timely Asset change polices & procedures (transfers, disposals, etc.) CIP review and reclassification Tax Asset Disposals, transfers etc. General Ledger Regulatory reporting requirements Systems/applications Governance/Polices & Procedures Activities Depreciation / amortization Statutory t t reporting requirements Asset Reporting 9

11 Contact Information Kevin J. Duffy 10