Industrial Gas Leader Refines its Approach to Fixed Assets Management With Bloomberg Tax Software

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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.

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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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.”