goldstrike fixed asset solution ™ paragon systems 1 fas - generate cash flow scott swarts session...
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Goldstrike Fixed Asset Solution ™
Paragon Systems1
FAS - FAS - Generate Generate Cash FlowCash Flow
Scott SwartsScott Swarts
Session 2Session 2Room BRoom B
Tennessee’s
BEST 2005 Tech
Tips User
Conference
Goldstrike Fixed Asset Solution ™
Paragon Systems2
AgendaAgenda
• Session Overview• Taxes, SOX and related issues• Review benefits of implementing fixed
asset management system• Discuss implementation and inventory• Review demo of fixed asset software• Sample bar code tags and scanner• Q&A
Goldstrike Fixed Asset Solution ™
Paragon Systems3
PARAGON International, PARAGON International, IncInc20 years of service and over 50 million assets
reviewedPARAGON SYSTEMS:• Dedicated to enhancing fixed asset management• Sage Software™ Charter Business Partner • Complete Solution of hardware, software, servicesPARAGON VALUATION GROUP:• maximizing corporate tax benefits• Cost segregation and Tax Engineering• Valuation and appraisal services
Goldstrike Fixed Asset Solution ™
Paragon Systems4
TAX, S.OX, ISSUESTAX, S.OX, ISSUES
Goldstrike Fixed Asset Solution ™
Paragon Systems5
““Bonus” DepreciationBonus” Depreciation
• Workers Job Creation Act• Immediate Write off• Reduction in Basis• Bonus 30-50%• Sept 11, 2001 – 2004• Dates for change to 50%
Goldstrike Fixed Asset Solution ™
Paragon Systems6
Sarbanes Oxley Act Sarbanes Oxley Act BackgroundBackground
• Overview - Not legal or financial advise, consult your professional auditor or accountant
• 2002 Congress passed new regulations designed to improve governance of public corporations
• Reduce fraudulent corporate reporting• Holds CEO’s and CFO’s personally responsible for
accuracy of financial reporting
Goldstrike Fixed Asset Solution ™
Paragon Systems7
Sec 404 - Internal Sec 404 - Internal ControlsControls• Management responsible to assessment
of internal controls over financial reporting including IT controls
• Establish and document internal controls on how information enters the company and relates to completion of annual reports
Goldstrike Fixed Asset Solution ™
Paragon Systems8
Fixed Asset Inventories and Fixed Asset Inventories and SOXSOX• Accurate inventory is the core of solid
financial reporting• Physical Inventories conducted using same
method• Procedures for reconciliation • Barcoding Assets• Standardization on naming conventions
Goldstrike Fixed Asset Solution ™
Paragon Systems9
Asset Management & Asset Management & Control Control
Goldstrike Fixed Asset Solution ™
Paragon Systems10
ObjectiveObjective
• Improve control and reduce labor costs of asset management
• Automate and simplify the task of tracking fixed assets
• Identify unrecorded retirements (15-30%)
• Create CASH FLOW!
Goldstrike Fixed Asset Solution ™
Paragon Systems11
What Are The Benefits?What Are The Benefits?
(Inquiring Minds Want To Know)
Goldstrike Fixed Asset Solution ™
Paragon Systems12
Minimize Operating Minimize Operating ExpensesExpenses
• Federal & local taxes• Third party accountability• Property taxes
(disposed/transferred assets)• Write off of retired assets• Track maintenance/service costs
Goldstrike Fixed Asset Solution ™
Paragon Systems13
Support Strategic Support Strategic Management PlanningManagement Planning
• Depreciation expense projections (book & tax)
• Forecast asset ratios• Cost Center budgeting and control
Goldstrike Fixed Asset Solution ™
Paragon Systems14
Determine Proper Determine Proper Insurance CoverageInsurance Coverage
• Avoid risk of being underinsured• Minimize “proof of loss” exposure• Accurate premiums / fire rates• Base coverage on replacement
costs not historical costs
Goldstrike Fixed Asset Solution ™
Paragon Systems15
Eliminate Unnecessary Eliminate Unnecessary Asset PurchasesAsset Purchases
• Idle or unassigned assets
Goldstrike Fixed Asset Solution ™
Paragon Systems16
Identify Unrecorded Identify Unrecorded Retirements & TransfersRetirements & Transfers
• Document write-offs
Goldstrike Fixed Asset Solution ™
Paragon Systems17
Ghost AssetsGhost Assets
• Assets that are no longer there but cost still on the books
• Group type entries from projects• Unrecorded damage or abandonment,
replacement• Partial Disposals , Transfers• Typically find 15-30% unrecorded retirements
Goldstrike Fixed Asset Solution ™
Paragon Systems18
Controllable Property UnitsControllable Property Units
• Break assets into manageable groups based on operational needs
• Truck with multiple assets for service or equipment
• Manufacturing line – Components, motors, process sections, engineering fees
• Server with sub-components
Goldstrike Fixed Asset Solution ™
Paragon Systems19
GoldStrike Solution GoldStrike Solution SummarySummary• Complete corporate asset database
installation/conversion• Physical inventory and bar coding of all
assets• Cost Reconciliation • Setup new asset ledger in FAS and
provide training
Goldstrike Fixed Asset Solution ™
Paragon Systems20
Economic Benefits of Project Economic Benefits of Project ImplementationImplementation• Are your current asset records
accurate within 95% of actual asset inventory physically there?
• If we find unrecorded retirements in excess of 5%, the project typically GENERATES CASH FLOW!!
Goldstrike Fixed Asset Solution ™
Paragon Systems21
BREAK EVEN and ROIBREAK EVEN and ROI
Goldstrike Fixed Asset Solution ™
Paragon Systems22
ABC Company's Major ABC Company's Major Fixed AssetsFixed Assets
Fixed Asset Qty Avg. Value Total Value
Printing Press 50 $30,000 $1,500,000Folding Machine 20 $5,000 $ 100,000Cutters/Trimmers 20 $5,000 $ 100,000Binding/Stitching 30 $5,000 $ 150,000Shrink Wrap Equip 10 $5,000 $ 50,000Prepress/Camera 20 $15,000 $ 300,000Misc. Equipment 100 $3,000 $ 300,000
Total 250 $10,000 $2,500,000
Goldstrike Fixed Asset Solution ™
Paragon Systems23
Income TaxIncome Tax
• Total cost of fixed assets $2,500,000
• Avg. value of ghost assets ($2,500,000 x 7%)$175,000
• Accumulated depreciation $70,000• Net book value/potential write-off ($175k - $70k)
$100,500• Tax rate x 0.39• Total income tax overpayment $40,950
Goldstrike Fixed Asset Solution ™
Paragon Systems24
Property TaxProperty Tax
• Total cost of fixed assets $2,500,000• Avg. value of ghost assets $175,000• Less accumulated depreciation factor (70%)
$122,500• Taxable base ($175,000 - $122,500)
$52,500• Representative assessment rate x 0.045
• Total property tax overpayment per year $2,360
Goldstrike Fixed Asset Solution ™
Paragon Systems25
InsuranceInsurance
• Total cost of fixed assets $2,500,000• Avg. value of ghost assets $175,000• Avg. insurance payment per fixed asset 0.01 per $1• Total insurance overpayment per year
$1,750
Goldstrike Fixed Asset Solution ™
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SummarySummary
• Total income tax overpayment $40,950• Property tax overpayment $ 2,360• Insurance overpayment $ 1,750
• Total overpayment $45,060• Estimated cost of fixed
asset management solution $25,000
• Return on investment (ROI) Immediate!
Goldstrike Fixed Asset Solution ™
Paragon Systems27
IMPLEMENTATIONIMPLEMENTATION
Let’s Get Started!
Goldstrike Fixed Asset Solution ™
Paragon Systems28
Managing Asset Activity Managing Asset Activity ExampleExample• Invoice costs are logged to a clearing account for
new capitalized assets• Copies of Invoices are collected in folder for month
end processing• Disposals are documented and tag information
sent to accounting via paper or electronic disposal form
• Asset activity logged in tracking system• Monthly asset and depreciation reports
Goldstrike Fixed Asset Solution ™
Paragon Systems29
Implementation Plan Implementation Plan ChecklistChecklist• Review internal processes for managing assets• Set goals for implementation• Establish plans for inventory, what and how • Perform inventories• Reconcile results with existing ledgers• Prepare final reports of results and document write-offs
or additions• Setup for ongoing management in a fixed asset system• Document and train on new procedures for ongoing
management
Goldstrike Fixed Asset Solution ™
Paragon Systems30
FAS Software by SAGEFAS Software by SAGE
• #1 Fixed Asset Management Application• Chosen 3 to 1 over alternative systems• Integrates with virtually any GL System• Over 300,000 tax rules and regulations • Integrates with Bar Code Technology • Automated Reconciliation Processes
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