Asset Management:

Best Practices for Small & Mid-sized Businesses

December 6, 2007

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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

EnterprisesEx-Andersen employees with minimum experience of 6 years

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)

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What are small businesses saying?

“We can’t get the fixed asset information we need from our

accounting system.”

“I spend too much time trying to keep track of fixed asset data

and calculations in Excel.”

“Were there asset dispositions we didn’t know about?”

“It takes too long to provide required information to the

different stakeholders.”

“We do not know where our fixed assets are located.”

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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

– Inadequate controls and processes

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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

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

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Demonstration:SAP® Business One

&Fixed Assets

Manager

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

fixed assets

2. Order Arrives. Now there is an account payable for the fixed asset

3. The fixed asset must also be recognized and tracked in FAM

Fixed Asset 1

Fixed Asset 1

4. Track depreciation over time. As time passes, FAM generates Journal entries for depreciation of

fixed assets which are posted to the General Ledger

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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

HIGH VALUEASSET

MANAGEMENT

LIMIT AUDITEXPOSURE

STREAMLINE COMPLIANCE

REDUCE COSTS

ENABLE STRATEGIC PLANNING

Strategic Activities

Compliance Activities

MANAGE ASSET LIFECYCLEMANAGE ASSET LIFECYCLE

Time Spent on:

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)

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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!!!!!

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

(941)379-7106

www.redmoonsolutions.com