slide deck sage sponsored webcast with cfo publishing 06-25-15

8/18/2019 Slide Deck Sage Sponsored Webcast With CFO Publishing 06-25-15

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FIXED ASSET DEPRECIATION:

ARE SPREADSHEETS PUTTINGYOUR COMPANY AT RISK?

June 25, 2015


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SPEAKERS

Grant GriebelSage Fixed Asset Solutions Engineer

Sage Mid-Market Solutions

Chris SchmidtDirector, Research and Custom Content

CFO Publishing


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• Risks that spreadsheets pose togeneral finance processes,

including depreciation—Chris

• Depreciation: Are spreadsheetsputting your company at risk?—

Grant• Audience Q&A

AGENDA


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We use spreadsheetsfor many things, too


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I use Excel, too

Not this way


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Fixed asset and

depreciation-

management challenges

FixedAssets


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• Business complexity• Speed of change• Increased regulatory scrutiny

Three Main Forces


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Increased risk


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Business complexity


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External

Internal

• Geographic

expansion• M&A• Strategic role

• Organization

change• Leadership

change


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Speed of change


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And the boss

says speed

up…


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Regulatory

scrutiny


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Transparency in reporting


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Ensuring that reality is

reflected in reporting


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“I spent more time building and managing

the model, and making sure none of the

links are broken, than I did managing the

data to ensure it fit the strategic plan.”

– CFO, Medical Services Outsourcing Firm


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Depreciation


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“I want to take the resources out of

maintaining the spreadsheet-based model

and put them into thinking about the

business itself .”

– VP Finance, Construction Products Distributor


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A moving target


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Depreciation: Are spreadsheets putting your company at risk? 20

Depreciation:

Are spreadsheetsputting your

company at risk? Grant Griebel –Sage Fixed Assets Solutions EngineerJune 26, 2015


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Depreciation: Eliminating the risks ofspreadsheets

21

Why shouldn’t I be using spreadsheets to manage my fixedassets?

What are the risks?

What alternatives are available to me?

Depreciation: Are spreadsheets putting your company at risk?


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Depreciation: Eliminating the risks ofspreadsheets

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Agenda:

• Spreadsheet dangers

• Benefits of a dedicated fixed asset solution

• Managing the entire Fixed Asset Process



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What do you mean

spreadsheetdangers?



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No Predevelopment Design

Spreadsheet dangers



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Spreadsheet dangers

Inconsistent Reporting



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Spreadsheet dangers

Manual Sorting




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Spreadsheet dangers

Manual Sorting

Manual Data Entry




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Spreadsheet dangers

Manual Sorting

Manual Data Entry


Worksheet Updates



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Spreadsheet dangers

Manual Sorting

Manual Data Entry


Worksheet Updates

Sarbanes-Oxley



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Spreadsheet dangers

Manual Sorting

Version ControlManual Data Entry


Worksheet Updates

Sarbanes-Oxley



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Spreadsheet dangers

Cell References

Manual Sorting



Worksheet Updates

Sarbanes-Oxley



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Spreadsheet dangers

Cell ReferencesManual Formulas

Manual Sorting



Worksheet Updates

Sarbanes-Oxley



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Spreadsheet dangers


Manual Sorting


Fraud Concerns


Worksheet Updates

Sarbanes-Oxley



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Depreciation: Eliminating the risks of spreadsheets 34


Spreadsheet dangers


Manual Sorting

Version Control

No Audit Trail

Manual Data Entry

Fraud Concerns


Worksheet Updates

Sarbanes-Oxley


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Spreadsheet dangers

No Documentation


Manual Sorting

Version Control

No Audit Trail

Manual Data Entry

Fraud Concerns


Worksheet Updates

Sarbanes-Oxley



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Spreadsheet dangers

No Documentation


Manual Sorting

Version Control

No Audit Trail

Manual Data EntrySecurity Concerns

Fraud Concerns


Worksheet Updates

Sarbanes-Oxley



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26 June 2015 37Depreciation: Are spreadsheets putting your company at risk?


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Data control

26 June 2015 38

• Spreadsheet knowledge tied to personnel

• Introduces the challenge of “version control”

• Minimal security and access control options

• Spreadsheets do not scale well with growing businesses

• Have to incorporate formulas for changing tax law by hand

Data control with spreadsheets is a headache. Here’s why:



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Data Integrity

•Bad reports

•Inaccurate asset values

•Inaccurate asset counts

•Bad budget info

•Bad depreciation calculations

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Dirty data impacts multiple parts of the business



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Real world examples:Eastman Kodak Company

“Eastman Kodak Company restatedfinancial results for the first and secondquarters by $2 million and $13 million,

respectively, due to an erroneousspreadsheet that calculated severanceand special pension-related terminationbenefits.”

40http://www.pcworld.com/article/127189/article.htmlDepreciation: Are spreadsheets putting your company at risk?


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Real world examples:RedEnvelope, Inc.

“Shares of RedEnvelope Inc. tumbled more than 25

percent . . . after the online retailer of specialty

gifts drastically reduced its fourth-quarter outlook”

Stanford Group analyst Rebecca Jones Kujawa saidin an interview. “ . . . they were underestimating

the cost of goods sold . . .” RedEnvelope

spokeswoman Jordan Goldstein said the budgeting

error was simply due to a number misrecorded in one

cell of a spreadsheet that then threw

off the cost forecast.

41http://www.eusprig.org/stories.htmDepreciation: Are spreadsheets putting your company at risk?


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Real world examples:CECO

“CECO’s in-house accounting staff hasdiscovered an accounting error in thespreadsheet calculations used by the

Company’s construction division for its‘percentage of completion’ accounting. The neteffect will be a cumulative reduction in revenueof $1,969,000 over the four year period 2000 to

2003 with an equivalent charge to pretax netincome.”

42http://www.bizjournals.com/cincinnati/stories/2005/02/07/daily31.htmlDepreciation: Are spreadsheets putting your company at risk?


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Spreadsheets kill data integrity

The facts:

• “64% of financial spreadsheets audited contained errors. Of thosespreadsheets with errors, they found ten had an error exceeding $100,000, sixover $10 million, and one in excess of $100 million.”1

• “AMR has repeatedly found that 65 percent of fixed asset data is incomplete,inaccurate, or altogether missing, while 10 percent to 30 percent of fixedassets are no longer owned.”2

• “30 to 90% of all spreadsheets tested suffer from at least one major user error.In addition, none of the tests included spreadsheets with more than 200 lineitems, where the probability of error approaches 100 percent.”3

431. http://panko.shidler.hawaii.edu/SSR/Mypapers/whatknow.htm 2.Data Validation the Best Practice for Data Quality in Fixed AssetManagement,” www.amrnow.com 3. 2007 study Tuck School of Business at Dartmouth College

http://panko.shidler.hawaii.edu/SSR/Mypapers/whatknow.htmhttp://www.amrnow.com/http://www.amrnow.com/http://panko.shidler.hawaii.edu/SSR/Mypapers/whatknow.htm


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How can a fixedasset solution

eliminate the risks

of spreadsheets? Depreciation: Are spreadsheets putting your company at risk?


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How does a fixed asset solution avoidrisks of spreadsheets?

A solution will eliminate risk by:

• Putting checks and balances on how data is entered into

your asset registry

• Removing the ability to have to manually manipulate data

– closing the door on human error and dirty data

• Maintaining data integrity and saving time and errors byautomating processes



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Depreciation: Managing the financialaspects of fixed assets

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Fixed assets solutions should include:

• Up to date tax laws and depreciation

methods to run and post depreciation

• Customizable fields and smartlists to

control data entry – preventing bad data

at the source

• User permissions structure to ensuredata security



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at the source




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at the source




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at the source




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What are fixed asset solution userssaying?

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TechValidate: http://www.techvalidate.com/product-research/sage-fixed-assets/charts


http://www.techvalidate.com/product-research/sage-fixed-assets/chartshttp://www.techvalidate.com/product-research/sage-fixed-assets/chartshttp://www.techvalidate.com/product-research/sage-fixed-assets/chartshttp://www.techvalidate.com/product-research/sage-fixed-assets/chartshttp://www.techvalidate.com/product-research/sage-fixed-assets/chartshttp://www.techvalidate.com/product-research/sage-fixed-assets/chartshttp://www.techvalidate.com/product-research/sage-fixed-assets/chartshttp://www.techvalidate.com/product-research/sage-fixed-assets/charts


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What are the biggest benefits?

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TechValidate: http://www.techvalidate.com/product-research/sage-fixed-assets/charts


http://www.techvalidate.com/product-research/sage-fixed-assets/chartshttp://www.techvalidate.com/product-research/sage-fixed-assets/chartshttp://www.techvalidate.com/product-research/sage-fixed-assets/chartshttp://www.techvalidate.com/product-research/sage-fixed-assets/chartshttp://www.techvalidate.com/product-research/sage-fixed-assets/chartshttp://www.techvalidate.com/product-research/sage-fixed-assets/chartshttp://www.techvalidate.com/product-research/sage-fixed-assets/chartshttp://www.techvalidate.com/product-research/sage-fixed-assets/charts


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What about

the rest of theFixed Asset

Process? Depreciation: Are spreadsheets putting your company at risk?


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Begin taking physical inventories ofyour assets!

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Your fixed asset solution should:

• Take advantage of existing data

from your depreciation management

• Ensure when you perform a physical

inventory asset data is accurate and

up-to-date

Fixed Assets Database

Track Depreciate



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How does inaccurate asset dataimpact my bottom line?

We can estimate the potential impact ofinaccurate asset counts using someaverages:

• Average federal tax rate: 30%

• Average state tax rate: 6%

• Average property tax rate: 3.4%

• Average insurance rate of 0.01 per $1



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Plan, budget and place WIPs intoservice

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A fixed assets planning solutions should:

• Compare invoices to budgets

• Pass finished assets into the database

Planning solution

Fixed Assets Database



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Key Takeaways

• Spreadsheets are a good starting point… butthey are only that, a starting point.

• Spreadsheets have limited security controloptions

• Creating reports by hand from spreadsheets istime consuming and prone to error.

56Depreciation: Are spreadsheets putting your company at risk?


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Connect with usWe’re here to help

•Visit: www.SageFixedAssets.com

•Call us at: 800-368-2405

•Email me: [email protected]

57Depreciation: Are spreadsheets putting your company at risk?

mailto:[email protected]:[email protected]


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Questions and Answers


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Questions and Answers

Grant GriebelSage Fixed Asset Solutions Engineer

Sage Mid-Market Solutions

Chris SchmidtDirector, Research and Custom Content

CFO Publishing


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FIXED ASSET DEPRECIATION:

ARE SPREADSHEETS PUTTINGYOUR COMPANY AT RISK?

June 25, 2015

slide deck sage sponsored webcast with cfo publishing 06-25-15

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