1、Best Practice Financial Processes: Fixed Assets,Fixed Assets - Best Practice Objectives,Fixed AssetsObjectives,To maintain a complete register of all the organisations fixed assets which reflects location, age, current values, associated cost centresTo calculate depreciation consistently with financ
2、ial reporting requirementsTo optimise replacement policiesTo minimise ownership costs,Organisation,Asset recording integrated with maintenance and non financial dataCentralised asset accountingAsset ownership devolved to business unit level,People,Control focusedChallenge asset requisition proposals
3、,Processes,Maintain asset registerAcquisitions and disposalsDepreciation chargeVerifying asset baseMaintaining of valuation basis,Controls,Asset verificationAsset valuationAcquisition and disposal authorities,Measures,Number of assets maintainedCost of departmentElapsed time to record asset,Informat
4、ion Systems,Asset ledgers integrated with GL and APDepreciation and project control by cost centreAutomated depreciation calculation,Maintain fixedasset register,Control acquisitionsand disposals,Manage periodicasset depreciation,Verify and valueasset base,Process Features,Determine asset categories
5、 for internal and statutory purposesMonitor asset maintenance chargesApply insurance valuation to key assetsEnsure asset responsibility at BU levelIdentify asset usage,Set up appropriate control of asset acquisition and disposals across companyReport on acquisitions and disposals on a monthly basisM
6、onitor tax issues related to acquisitions or CIPEnsure BU responsibility for assets in their use and for disposal losses,Depreciate at point of asset useApply depreciation rules to asset classesDepreciation rates in management accounts in line with statutory ratesLinks asset depreciation to producti
7、on and product costs/development,Revalue key assets on a regular basis based on book value and high riskComprehensive asset verification on regular periodic or rolling basis where asset cannot be verified via technical assumptions (most telcos do not verify network assets: the fact that the network
8、works is verification enough)Verify non capitalised assets,System Features,On line asset register holding key data and current cost allocationCost code validation with GLAutomatic links to AP and Project Accounting system to capture acquisitionsRevaluation of features and mass transfers of assets to
9、 new cost centresLeased asset features compliant with accounting standards,Acquisition linked to purchase order and accounts payable ledgerDisposals linked to sales ledgerCIP linked to capital project accountingEffective tax management integrated with the fixed assets system,Depreciation charged aut
10、omatically to cost centres in GLForecast asset depreciation for budget purposesVariable depreciation rules for classes of assetsAssets can be grouped for depreciation rules,Variable asset valuation mechanisms eg historic, current replacementComplete asset reports by physical location and cost centre
11、Report on identified or missing assetsHold non capitalised physical assists for verificationBar coding of assets for verification,Fixed Assets - Best Practice Features,Fixed Assets - Measures/Cost Drivers,No of Business Unit FTEs per Fixed Assets FTE,10 percentile,Median,90 percentile,7,31,151,Cost
12、drivers,Fixed Assets cost per Business Unit FTE (in s),Median,14 days,90 percentile,40 days,10 percentile,1 day,Fixed Assets processing time,Complexity of assetsNumber of assets on registerNumber of asset movementsComplexity of depreciation policiesComplexity of authorisation proceduresRange of data
13、 heldNumber of users of data range,Source: Statistics taken from Benchmarking database: 21 February 1997,Separate fixed assets moduleLack of asset ownershipCost of asset usage not attributed to productPerformed by Finance Department,Integrated systems for:Asset tracking via Geographical Information
14、System (GIS)Asset usageNetwork Capacity PlanningAsset MaintenanceCapital project planning and controlProduct/service costingBU responsibility for ownership,From,To,Fixed Assets - Trends,Fixed Assets - Critical Success Factors,These are a summary of the key business requirements, which must be met to
15、 achieve the objectives.,Asset accounting policies clearly documentedAppropriate coding by asset category establishedAuthority levels clearly definedProcedures surrounding Fixed Asset process are documented and communicated to staffBudgets in place for capital expenditureAll existing assets identifi
16、ed and classifiedStaff trained in FA process and have clear roles and responsibilitiesStatutory and tax requirements understoodFA calendar in place and communicated to staffStanding data set up on the system reflecting asset accounting policiesAbility to model depreciation scenario,Inventory,Account
17、s Payable,Audit,Project accounting,Purchasing,General Ledger,Fixed Assets,Fixed Assets - Level 0 Context Diagram,Asset data (depreciation etc),Goods issued,Asset details& asset payments,Mgt Reports,Statutory reports,Asset disposals,Capitalised assets,Commitments,Unique asset identifier,Management Ac
18、counting,Accounts receivable,Maintenance,Maintenace Cycle,Circuit Provisioning,Usage data,Fixed Assets - Level 1 Overview,FA 1.1 Maintain Standing Data,FA 1.2 Add Assets,FA 1.3 Dispose of Assets,FA 1.4 Maintain Asset Register,FA 1.5 Perform Period End Routines,FA 1.6 Verify Physical Assets,Activitie
19、s,FA 1.7 Answer Adhoc queries,Raise request e.g. new asset classPrepare formal requestReview and approve Set up new codes / dataNotify affected users and departments,Input automatic dataInput manual dataAdd additional informationPost asset details,Receive requestTransfer assetsAdjust assetsRevalue a
20、ssetsCapitalise WIP assetsReport on amendmentsWrite - off / down assets,Capitalised labour calculationDepreciation calculated Depreciation posted to GL Reconcile accountsSend monthly reports to owners,Compile accurate data for asset verificationConduct inventory checkHighlight exceptionsTrack asset
21、history & reconcileUpdate FA register & prepare GL journals,Receive requests for adhoc reportsProduce reports,Select assets to disposeObtain quote if applicableSell / dispose of assetsNotify relevant accountantsRecord transactions in accountsReconcile GL accountsCalculate profit/loss on disposal,Cha
22、nges in FAPolicies and Procedures,FA registerstructuremaintained,Updated FA Register,Updated FAregister &reports,ReconciledGL A/ cs,Request for adhoc reports,Reports,Verified FARegister,Authorised GLadjustments,Assets from AP or project accounting,Asset Additionnotification,GL a/ cs maintainedfor di
23、sposal,Updated FARegister,GL a/cs maintainedfor additions,Asset addition notification,Amend/update asset types or categories,Maintain Standing Data,FA 1.1,Adjustments,Reports,Notification proceduresSystem validation controlsChange request proceduresAuthorisation rules,RequesterFA accountantFinance m
24、anager,System controlsAccounting policies,Disposal procedures, validation procedures, authorisation, reconciliation procedures,Cost centre manager, FA accounting staff,FA requester, financial manager,Reports,AP systemFA accounting staffCost centre managers,Authorisation proceduresMaintenance policyS
25、ystem controls,FA accounting staffCost centre managerManagement accountant,Depreciation policiesMaintenance policiesSystems controlsMonth end reconciliationPeriod end timetableCost centre analysis,FA accounting staffFA system,Verification timetableInventory control systemAudit trialAuthorisation for
26、 write offs,FA accounting staffInventory staff,Reporting guidelinesSystem controls,FA accounting staffFA systemsCost centre managers,Fixed Assets - Level 2 FA1.1 Maintain Standing Data,FA 1.11 Raise request,FA 1.12 Prepare formal request,FA 1.13 Review and approve,Sub Processes / Notes,FA 1.14 Set u
27、p new codes / data,Send request to FA accountant by e-mail with full explanation / reason for request,Evaluate request against current FA Register to identify actual need for new standing dataRaise request and attach original,Evaluate requestCommunicate acceptance or rejection to originator,Set up s
28、tanding data by FA AccountantReview set-up data and codes periodically,FA 1.15 Notify affected users and groups,Changes inFA PoliciesandProcedures,Request,Formal request,Acceptedrequest,Rejected request,Actionedrequest,FA Registerstructuremaintained,Amend/updateasset typesor categories,Send formal n
29、otification of set-upNotify that request rejected and why,Changerequestprocedures,Changerequestprocedures,Authorisationrules,Systemvalidationcontrols,Notificationprocedures,Requester,FA Accountant,Finance Managers,FA Accountant,FA Accountant,Fixed Assets - Notes on Maintain Standing Data,Best Practi
30、ce FeaturesAsset accounting polices clearly documented; Master Data set up on the system to reflect these policiesAppropriate coding by asset category establishedProcedures surrounding the Fixed Asset process are documented and communicated to staff including requirements for issuing new codesAsset
31、Register Rules incorporated into Master File, which control issues of new numbers within structured coding schemeStaff trained in Fixed Asset Accounting processes and have clear roles and responsibilities. They should have a good understanding of network and engineering areasSupervisory staff unders
32、tand statutory and tax requirementsInternal Control RequirementsOnce entered, updates should be verified against the original requestsCodes will be received from the Master File and updates will be confirmed against the Master FileThe system will check that all required data fields are completeThere
33、 must be supervisory review for Master Data updatesKey Performance IndicatorsSpeed of update: time from receipt of request to modification and verification of records: this should not exceed one dayNumber of input errors when asset details are validated: this should be zeroCost DriversComplexity of
34、assetsNew types of assetsNumber of changes to physical location coding,Fixed Assets - Level 2 FA1.2 Add Assets,FA 1.21 Input automatic data,FA 1.22 Input manual data,FA 1.23 Add additional information,FA 1.24 Post asset details,Sub Processes / Notes,Receive asset addition notifications from AP into
35、FA RegisterRun interfaces with AP to transfer invoice linesTag/label asset with unique identifier,Manually enter assets which do not have invoice informationIdentify assets as ; WIP;Expenses; andCapitalised assets.,Add additional asset datail to lines e.g.assign asset categories;split or merge asset
36、s; andadd to existing as cost adjustment.Assign asset lifeAssign asset to departmental manager, location,Post prepared lines to fixed asset register,Assets from AP orProject Accounting,Asset additionnotification,AP lines withSkeleton details,AP lines with additional information,Added Assets,Updated
37、FA Register,FA register structuremaintained,FA register structuremaintained,GL a/c maintained for additions,System controlsAccounting policies,AccountingPolicies,SystemControls,AP SystemFA accounting staffSystem controls & accounting policies,FA accounting staff,FA accounting staff,FA accounting sta
38、ffCost centre managers,Fixed Assets - Notes Add Assets,Best Practice FeaturesLinked databases used in recording asset details, to increase accuracy of the asset register and to eliminate duplicate paper trailsAppropriate asset “numbering” methods driven by users of asset information; bar coding used
39、 on relevant assetsDirect links to Project AccountingClear policy established for treatment of assets and guidance on how to classify different types of assets, to reduce the number of reclassifications neededSystem interconnection to MIS (Management Information Systems) for tax and insurance planni
40、ngAssets identified by “custodian”, i.e. person who controls the asset, rather than a department or the company as a wholeUnified transfer pricing in all Business Units for asset transfersUse of asset transfer strategy to optimise the usage of assetsInternal Control RequirementsAsset number controls
41、All asset register updates reviewed after entry, to limit period end differencesUpdate details sent periodically to source and asset custodian (or other initiator of the update) for information and coroboration purposesKey Performance IndicatorsNumber of reconciliation at period end: if a reconcilia
42、tion is needed between Fixed Assets and other accounts, this indicates that one or other of the accounts is not up to dateNumber of changes processedNumber of verification adjustmentsCost DriversNumber of assetsAverage useful life of assets (i.e. rate of asset turnover)Number of changes in Master Da
43、ta leading to manual adjustments.(e.g. change in organisation codes)Number of revaluations / disposals,Fixed Assets - Level 2 FA1.3 Dispose of Assets,Sales priceand buyerconfirmed,Sale/Disposalcompleted,Asset sale ordisposalregistered withAccounts dept,FARegisterupdated,Assetsidentifiedfor disposal,
44、Asset disposalnotification,Interfaceto GL,FA 1.31 Select assets to dispose,FA 1.32 Obtain quote (if applicable),FA 1.33 Sell / Dispose of Asset,FA 1.34 Notify Accountants,FA 1.36 Reconcile GL accounts,Sub Processes / Notes,Cost Centre managers identify items for disposal,Cost Centre manager to obtai
45、n quote for asset, place item in auction, or advertise as appropriate,Asset sold and monies received by Cost Centre managersCost Centre managers to ensure monies received for assets as agreed or expected from auctionInvoices raised by AR for sale of assets on credit,Cost Centre managers to notify FA
46、 staff /accounts of disposals Cost Centre manager to ensure asset payment received and registered.,Ensure FA register reconciles with asset values in GLGL maintained for DisposalsEnsure that all details of profit / loss have been recorded accurately to the correct cost centres in GL,FA accountant to
47、 update register with disposals,FA 1.35 Record Transactions in accounts,GL a/csmaintainedfor disposals,Update FAregister,Disposal procedures,Valuation procedures,Authorisation procedures,Disposal procedures,Disposal procedures,Reconciliation procedures,Cost centre managers,Cost centre managers,Cost
48、centre managers,Cost centre manager,FA accounting staffFA register,FA accounting staffFinancial manager,Fixed Assets - Level 2 FA1.4 Maintain Asset Register,FA 1.41 Receive Request,FA 1.42 Transfer Assets,FA 1.43 Adjust Assets,FA 1.44 Write-off / down assets,Sub Processes / Notes,FA 1.45 Revalue Assets,FA 1.46 Capitalise WIP Assets,FA 1.47 Report on adjustments,Receive request to alter fixed assets register,Transfer single asset between GL depreciation expense accounts or departmentsTransfer a group of assets between GL depreciation expense accounts or departments,
