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