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Challenge: Streamline processes, decrease turn-around time, and improve accuracy of fixed asset management and reporting
Due to limitations of the company’s ERP system, the tax department at a leading industrial gas company was spending a significant amount of time tracking and managing fixed assets for the capital-intensive business and relying on Excel spreadsheets to calculate depreciation for U.S. federal and state tax reporting. The process required significant manual manipulation of data extracted from the ERP system, updating Excel macros and formulas for changes in legislation and other complexities resulting from basis adjustments, tracking of intercompany transactions, differences in state calculations, and differences in depreciation schemes to support other calculations and planning (e.g., E&P).
In addition, the process was developed and owned by a limited group of people in the department, making it an “at-risk process” that was not repeatable without the in-depth knowledge of the process owner, creating a process continuity issue.
The senior tax analyst was spending weeks each year developing massive Excel spreadsheets to break down each asset into its depreciable components and creating macros to calculate depreciation on an asset-by-asset basis for each entity. It was readily acknowledged that this was not best practice, however, the organization was limited by an ERP system that did not support U.S. tax depreciation, and otherwise lacked the time and in-house resources to develop what was needed, amongst competing priorities.
Bloomberg Tax Fixed Assets will remove much of the burden from our team and reduce the time spent managing and reporting on fixed assets for tax.
Solution: Deploy a best-of-breed fixed assets software solution
The company considered three options to solve its fixed assets challenges: (1) outsource; (2) build an ERP integrated solution or; (3) buy a solution that met the organization’s requirements.
“Outsourcing ultimately was not a solution for us,” said the director of tax. “We wanted to own and control our data and maintain flexibility in our processes. It was important to us to have complete control of our data so that we can model scenarios, calculate depreciation, or run reports any time without having to rely on external consulting services.”
The director of tax further explained that while initially attractive to build an ERP, the company lacked in-house resources to maintain the code, so there was significant risk to this alternative.
“Changes in federal and state legislation would require frequent adjustments to ERP coding, placing the onus on the tax department to track, integrate and test changes on an ongoing basis,” said the director of tax. “This created a significant amount of obsolescence, timing, and control risk.”
The company chose Bloomberg Tax Fixed Assets after researching and evaluating the alternatives.
“Bloomberg Tax Fixed Assets was the best tool for us because of its flexibility to support our current and future needs, audit trail and controls, disaster recovery, and automatic updates whenever there are legislative changes.”
With assistance from Bloomberg Tax Professional Services, they deployed Bloomberg Tax Fixed Assets and imported its data on more than 40,000 fixed assets.
“It’s been great working with Bloomberg Tax,” said the company’s senior tax analyst primarily responsible for the process. “All the resources, from the online guides to training and customer support, were extremely helpful, especially going into compliance season.”
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With Bloomberg Tax Fixed Assets, I can focus more on analyzing and reviewing assets instead of worrying about whether calculations are happening correctly.
Results: Save weeks of time while gaining auditability
While still new to using Bloomberg Tax Fixed Assets, the company is already seeing significant improvements and can envision how much time will be saved going forward.
“Bloomberg Tax Fixed Assets will remove much of the burden from our team and reduce the time spent managing and reporting on fixed assets for tax,” said the director of tax. “In addition, we have the built-in benefit of having the software track and incorporate legislative changes on a timely basis and know that the platform is subject to routine external review and audit to ensure the accuracy and safety of our data.”
The team also noted many intangible benefits, from better internal controls to the ability to easily model scenarios as they arise.
The senior tax analyst reported relief that she no longer must manually maintain fixed assets data and calculations using enormous spreadsheets.
“Not only was it tedious and time-consuming to handle the huge amount of fixed asset data and formulas, but the files had gotten so large that they would freeze or crash my computer,” she said. “I would have to turn off calculations just to use the spreadsheet, which is partly why the process took so long before. With Bloomberg Tax Fixed Assets, I can focus more on analyzing and reviewing assets instead of worrying about whether calculations are happening correctly.”
Next Steps: Improve other processes reliant on fixed assets data
With Bloomberg Tax Fixed Assets in place, the company – which has more than 70 production facilities and approximately 5,000 employees operating in the United States, Canada, Brazil, Colombia, and Chile – can now focus on improving and streamlining other fixed assets processes within the company.
“We’re looking at using Bloomberg Tax Fixed Assets to further support our property, and sales and use tax team’s processes as well,” said the director of tax. “Due to certain limitations of how book assets are recorded, our property tax team has to manually dig into fixed asset records to identify the correct tax basis for property tax purposes.
“With Bloomberg Tax Fixed Assets, we can have a separate book for property taxes that the team can use to do their research, identify, and further define individual components. This could also provide further insights for our income and sales and use tax teams.”
Bloomberg Tax Fixed Assets was one of the best software decisions our company has made in recent years. We can now pull multiple companies’ information and also download asset data into a usable format. We spend less time pulling reports and entering information and more time analyzing and comparing data.
We have used this product for decades as it is the most comprehensive and easy-to-use fixed asset software on the market. We can always count on timely product updates and 100% accurate calculations. It is our go-to product to manage our exhaustive list of fixed assets from acquisition to disposal and everything in between.
Bloomberg Tax Fixed Assets was, by far, the easiest system to use while offering all the functionality we were looking for. We saved 400 hours of effort and completed our review three weeks sooner than the previous year.
See for yourself
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