Acquire To Retire Discussion Document

Acquire To Retire Discussion Document

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  Acquire-to-Retire Discussion Document
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  Drivers Changes areprompting 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
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  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
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  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
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  Acquire-to-Retire Life Cycle The Acquire-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
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  Processes & Activities Monitoring Pre-acquisition Acquisition & Reporting Tracking  Capital expenditure  Purchasing  Data collection  Depreciation and requests requisitions amortization  Data entry  Justification  Purchase orders  Asset transfers  BU, Country, requirements regional balance  Receiving  Disposals sheet & P&L  Project approvals  Disbursements  Status changes  Product costing  Project tracking  Approval  Other significant  MD&A  Capitalization processes activities governance  Tax  Capital & expense  Analytics distribution  Market values  Asset identification 5
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  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 Budgeting/ ah- Approval/ phases include the process of Capital Expenditure hoc authorization requirements Polices Purchasing requests and approvals which ‒ Utilize project tracking methodologies ‒ Utilizes CapEx policies & procedures CaPex Review & Purchase Project order Management Request approvals ‒ Follows Capital & spending authority limits requisitioning module ‒ And follows Capitalization/depreciation rules The CapEx process normally defines - Authorization levels and information required Systems/applications for the approval process; Capitalization policies and procedures; Initial departmental/business unit ownership 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
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  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 Approval/ can be used to pre-populate assets subsystems and authorization Receiving General Polices Ledger project management. ‒ Requisition data Purchase order Validation and ‒ Vendor and asset information processing data collection Fixed Assets ‒ Asset information Project Accounts • Purchasing including the approval of purchase orders Management Purchasing Payable module ‒ Can be used for project tracking ‒ Can be used to compare against authorized Systems/applications project expenditures (automated controls) Governance/Polices & Procedures ‒ Used to track commitments (open PO’s) Activities • Receiving process is typically the process in which the Common Issues data is captured into Accounts Payable • Non-standardized requisition processes ‒ Data from A/P transactions are used to populate the fixed assets module (quite often manually) • Lack of integration with A/P and project tracking ‒ Receiving documents should contain vital • Incorrect accounts being utilized information such as serial #’s, model #’s and • Asset data not being captured very distinct descriptors and can be automated • Detailed asset information not available to populate required fields. 7
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  Monitoring Monitoring& Tracking Processes & 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 Asset manual activity. This is due to the fact that much Capitalization General Policies Ledger information is not available. ‒ A/P records Validation and Data collection ‒ Divisional/department asset activities adjustments ‒ Disposals ‒ Transfers BU, Regional Accounts Fixed Assets reporting Payable ‒ Maintenance (if tracked) Systems/applications • A/P close process will generate additional fixed asset Governance/Polices & Procedures activities which will need to be included in the fixed Activities asset module. Common Issues • Multiple disparate systems • Divisional/department submissions include asset activity that has occurred but need to be taken into • Summarized A/P activity requiring research consideration throughout the month. These should be • Lack of asset movement reporting standardized reporting methodologies. • Lack of physical inventory policies & procedures • Business units not adhering to corporate requirements (Silo’s) • Lack of reporting capabilities 8
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  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 Monthly Close Asset change polices & Regulatory Statutory internal and external customers. Reporting Schedule/Task procedures (transfers, reporting reporting Lists disposals, etc.) requirements requirements requirements include: ‒ Data use for Tax reporting A/P month- CIP review Asset Depreciation end close and Disposals, / ‒ Data used for MD&A’s Data reclassification transfers etc. amortization transfer ‒ Data used by Divisions for inventory tracking Asset ‒ Data used for product costing Fixed Tax General Reporting Assets Ledger ‒ Data used for tracking Systems/applications The monthly close process requires the updating of the Fixed Assets module for Governance/Polices & Procedures activities such as CIP completion; Disposals; Transfers; Additions; Reclassifications ; Activities Reconciliations; Roll forwards Common Issues • 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 9
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  Contact Information Kevin J.Duffy [email protected] www.linkedin.com/in/duffyri 10