How to Effectively Manage Fixed Assets Data With Tax Automation

The challenges of fixed assets data

Enterprises are expected to use and keep fixed assets for at least one year – and because the value of these nonliquid assets declines with age, they can be depreciated. A major issue with fixed assets, however, is that this data is complex and large-scale, and can arrive in multiple and inconsistent formats from different sources, making it hard to manage.

One notable challenge for fixed assets data pulled from an enterprise resource planning (ERP) system is that data usually isn’t in the correct format to be imported into a separate fixed assets application. Transitioning data from source to destination isn’t always straightforward and can require complex business logic.

In addition, manually reformatting data is not only time-consuming but also can threaten the integrity of the data due to human error.

The resulting technical data challenges often can be divided into three groups:

1. Sourcing
2. Transformation
3. Reporting

As tax departments continue to deal with these issues, they are increasingly embracing technology and automation to bridge the gap and find resolutions.

See how Bloomberg Tax Fixed Assets helps you automate your most time-intensive processes without losing ownership of your data.

Data sourcing challenges

Tax professionals face three key problems when sourcing data for fixed assets processes such as planning and compliance.

First, enterprise companies generally have diverse ERP landscapes and frequently need to pull data from multiple ERP systems. While it’s commendable that many companies have tried to find ways to work with disparate systems, managing retrieval from multiple systems can complicate workflows, introduce the risk for errors, and require additional time. ERP systems also lack the level of detail needed for safe compliance, as they lack support for GAAP and tax depreciation, audits, and tax law updates – and can make data extraction and reentry a tedious necessity.

Although ERP systems do support the overall finance function, they also aren’t designed with tax in mind, which means tax professionals still may need to do lots of manual work in Excel, which carries risks. For example, manually managing and tracking asset transfers, disposals, and additions takes time and increases the risk of errors. This can lead to missed deadlines for period-end closings – along with creating an environment where staff is stressed and stretched thin.

Second, fixed assets data collection can be dependent on other departments, which can lead to inefficiencies. For instance, organizations often turn to IT departments to update ERP functionality and customize data, causing delays and strained resources. Many organizations also may turn to outside firms to keep up with collecting, standardizing, performing, and reentering calculations into the appropriate systems. But while this outside collection process saves staff time, it also results in a loss of control.

And third, tax departments can face challenges with inconsistent source system data. For example, it’s not uncommon for more than 50% of a company’s fixed assets data to be incomplete or inaccurate. As assets are tracked in multiple locations and tax jurisdictions, the amount of data continues to increase, and it can be difficult to accurately manage it.

Data sourcing solutions

To eliminate the pain of manually entering data, and reduce the risk of inconsistent source data, Bloomberg Tax Fixed Assets offers integration capabilities that enable you to mass import fixed asset transactions across multiple systems on demand or on an automated schedule, whichever you prefer. Our software also helps you streamline the review process by alerting you to any errors that need your attention and allowing you to make changes before the import is committed.

Bloomberg Tax Fixed Assets ensures your data is synchronized because it integrates with any ERP system, including SAP S/4HANA, Oracle NetSuite Cloud, Microsoft Dynamics, Workday, PeopleSoft, Costpoint, and more.

[See how our one-click automation helped Petco significantly reduce manual intervention, control risks, and the amount of time spent managing and cleaning data.]

Data transformation challenges

Tax departments face three key challenges with transforming data into usable formats.

First, using Excel to transform source data into a more useful format for tax and accounting systems is error-prone and time-consuming. For example, if you’re using standard spreadsheets, it can be easy to overlook tax law updates – which can lead to costly miscalculations. Plus, without visibility and automation for critical functions, spreadsheets present a continuity problem when the spreadsheet’s owner and knowledge base leave.

Second, the data transformation process can become more complicated due to tedious manual steps such as mapping, referencing external files, and consolidating information from multiple sources into a single dataset.

Third, existing data transformation processes aren’t well-documented, which can cause auditability and troubleshooting issues.

Data transformation solutions

Bloomberg Tax Fixed Assets uses workflow automation to help you gain efficiency. We offer custom implementations that will automatically transform your ERP data into the expected fixed assets data format.

Bloomberg Tax Fixed Assets is also securely integrated with Bloomberg Tax Workpapers, another powerful solution in our software suite. Bloomberg Tax Workpapers enables you to avoid manual steps by giving you the building blocks to build automated data transformation workflows that can be reused period over period for unlimited use cases such as importing fixed assets, reconciling data between systems, or pulling values directly into workpaper calculations.

The ability to centralize data from disparate systems and standardize repetitive data cleansing supports the need to have documented processes that can stand up to increased scrutiny from auditors.

In addition, with automatic tax law updates and validation, Bloomberg Tax Fixed Assets helps you stay ahead of regulatory changes that require data transformation. Our software can handle up to 99 books and an unlimited number of companies, letting you scale your data transformation needs as your business grows.

Data reporting challenges

Accurate reporting for fixed assets is critical for tax departments. But there are serious challenges associated with this work.

First, reconciling fixed asset records with financial statements and tax returns can be a time-consuming and error-prone process, especially when dealing with large volumes of data or complex asset portfolios. Tax professionals are consistently looking for ways to ensure that the data they are reporting on is in sync with source systems.

Second, reporting needs vary depending on the stakeholders. For example, tax departments need to prepare and file accurate tax returns, including the necessary schedules and supporting documentation for fixed assets. This can be a significant undertaking, especially when dealing with multiple tax jurisdictions including federal and state. Most source systems lack custom reporting capabilities to meet these unique needs.

Finally, maintaining proper documentation and audit trails for fixed asset transactions and calculations can be crucial for compliance purposes and in case of audits or disputes with tax authorities.