Protecting Your Business Assets While Improving Productivity
The case for fixed asset software.
November 1, 2007
Sponsored by BNA Software
Providing an audit trail for changes to financial data is a major compliance issue in today’s business environment. Tax and accounting departments continue to be called on to increase controls and provide transparency into every level of financial data.
Whether your company is small or large, public or private, you probably use spreadsheets in some fashion for calculating and reporting on financial data. Unfortunately, the use of spreadsheets — and more importantly, the lack of controls over spreadsheets — has been a contributing factor in financial reporting errors at a number of companies.
The lack of controls typically found in structured software applications can put companies at risk of significant error that can lead to restated financials, loss of credibility and monetary fines.
Other risks include lack of business continuity, fraud and non-compliance — particularly with Sarbanes-Oxley Section 404.
Ensuring Adequate Control of Spreadsheets
The following controls are normally used to ensure accuracy, availability and security for IT applications. These same controls are what must be implemented for higher risk/higher impact spreadsheets.
The Impact on Productivity
For complex spreadsheets, implementing and maintaining the proper controls is a time-consuming and sometimes nearly impossible effort — an effort that’s in addition to the already significant amount of resources required to maintain the spreadsheets as changes in the business occur. While spreadsheets are widely viewed as low-cost, personal productivity tools, more complex usage can lead to the opposite: A productivity drain as staff becomes application programmers.
A Complex Spreadsheet Example — Fixed Assets and Depreciation
Back when straight-line method was all that was required for depreciation, using a spreadsheet made sense. Today, the situation is dramatically different. In many instances, each asset has the possibility of being depreciated in six (or more) different ways — GAAP, regular tax, AMT, ACE, E&P and state(s) — and all at the same moment in time.
The complex and changing GAAP rules and tax laws that apply to depreciation add to the burden of tracking, interpreting and applying these laws in order to formulate and maintain the correct calculations.
The Safer Alternative
To eliminate the burden and risk of maintaining spreadsheets for important tax and accounting work such as fixed assets management, a packaged application from a reputable vendor will provide the program logic and calculations necessary to accurately and efficiently manage, depreciate and report on fixed assets.
Good fixed assets software has all the tax code and GAAP rules embedded within the product and has thoroughly-tested logic that ensures the rules are applied correctly. Frequent updates by the vendor guarantee that all changes and new laws are included in the software automatically.
When assessing fixed assets software, consider if the application:
To get the full report — Protecting Your Business Assets: A Report on Spreadsheet Risk — and to find out more about how you can protect you fixed asset data and assure timely, accurate depreciation calculations by moving from spreadsheets to an expert software application, go to www.bnasoftware.com/norisk1.