Review of Fixed Asset Management Systems -- 2006

From the December 2006 Issue

[Note: The review of BNA's Fixed Assets DesktopPro, which received a 5-Star rating, was inadvertently omitted from the print version of this review section. It has been added to the reviews listed below.]

I would be the first to admit that in the past, when it came to fixed asset accounting and related deprecation, I was a mountain man. I did not need any help back then; I could remember all the tax depreciation methods, conventions, useful life and the many special rules, etc.

For those of you who have never been afflicted with “mountain man spotted fever,” I will be happy to clue you in. A mountain man (or woman) knows all and can do it all — we learn everything once, we know all the answers, we never forget and we do not need any help! Applied to accounting work dealing with fixed assets and depreciation, we have a full deck of 52 cards, thank you very much.

Actually, the truth is, I used to be a better (tax depreciation) mountain man than I am today. In the 1970s, I started out using declining balance, sum of the year’s digits and straight-line methods for tax depreciation. Bonus depreciation was easy to deal with. Later in 1981, I had to learn and add the ACRS rules — the Accelerated Cost Recovery System. Then, in 1987, they added the Modified ACRS — or MACRS — rules.

My bag of tricks began to bulge. Bonus depreciation had evolved to Section 179, and it only applied to certain types of assets. The listed property rules could really complicate things. Not to mention that this class life “thingee” could be very difficult to deal with, even when you could figure out which assets were in which class or which assets had no class life! Then Congress brought back bonus depreciation and, well … it seems my mountain man memory went into permanent OVERLOAD, deserting me at times.

Before, at times, it was bad enough forgetting (small) parts of what I thought I knew. But in the end, call it 2001 or 2002, I found myself so confused that I forgot that I knew certain depreciation rules at all. There were more methods, rules, conventions and special exceptions than I had gray matter to store this information. Enter “cheat sheets” extracted from seminar material plus depreciation books and manuals topped off with five or six copies of the Class Life ADR System, which could be found in different locations strewn on or behind my desk!

Well, the secret is out. We are officially in an era of smart depreciation software. Actually, we should call it smart-ER software. Software that is windows-driven and takes advantage of the environment, with intuitive movement from field to field via the Tab or Enter key. Software vendors have been quick to recognize the dilemmas facing accountants. Now, the mountain people can select from drop-down menus with oodles of depreciation methods and related conventions, enough to cure the afflicted party of this dreaded ailment.

However, we all know that tax depreciation is not the ONLY reason to buy a fixed assets program. Auditors and accountants who maintain in-house accounting systems will quickly tell you that it is not ALL about tax depreciation. It seems they have to deal with the new detailed requirements of Sarbanes-Oxley, SOX for short. Tilt! SOX has created a completely new ballgame with respect to fixed asset accounting needs, or so it seems. SOX was passed to improve corporate accountability and financial transparency. The mandate for fixed assets accounting: Public companies must document their inventory of fixed assets and related acquisitions and dispositions. Likewise, auditors must study and report on the effectiveness of the system of internal control over fixed assets.