As the pace of globalization continues to increase, so too has the pressure to provide financial statements using international accounting standards rather than GAAP in order to make comparison easier. While a convergence of the IFRS and GAAP accounting standards is likely years away, the fixed asset challenges you have today can be solved with software automation that can also help prepare you for whatever the future may hold.
Before we go further, let's quickly clarify the acronyms used in this blog.
Background: IFRS vs. GAAP
Although U.S. accounting is currently governed by the FASB, more companies are adopting and reporting some or all of their financial results and calculations using IASB and IFRS rather than GAAP. Some companies do this to make benchmarking local and international business units easier, but reporting on two sets of standards creates a bookkeeping nightmare.
Differences in Fixed Asset Management
The two sets of standards have many things in common, however, there are many differences. One of the most common we see is in the area of fixed assets which have major differences that have massive implications for how accounting, key calculations, and reporting is conducted.
For example, in the case of component depreciation:
- GAAP allows component depreciation to be used.
- IFRS requires individual companies of fixed assets to be individually tracked and depreciated.
In another example, you’ll see a big difference in GAAP and IFRS in how an asset is valued over time:
- GAAP uses the historical cost for an asset’s basis.
- IFRS uses the historical cost initially but allows reevaluating an asset’s fair value.
You can see how differently your balance sheets under GAAP versus IFRS could look, just from these two examples listed here, but that’s just two examples in a long list of big differences between the two standards. It’s easy to see how difficult this would be to manage with spreadsheets and disconnected systems.
Account for Everything with Sage Fixed Assets
To get the most out of fixed asset depreciation, everything should be counted. That way, if your calculations are different as you go from one standard to another, you will already have the data you need for those computations. Tracking your assets with Sage Fixed Assets management software automates the tedious process. You can manage multiple projects at a time, regardless of the type or size.
Sage Fixed Assets offers flexible project cost management and reporting. You have multiple levels of detail tracking, including more than 45 user-defined fields, as well as a variety of built-in reports. In addition, you can easily manage both capitalized and expensed assets and get key project information instantly with “Project Snapshot.”
Sage Fixed Assets helps you automate:
- Depreciation: You get the flexibility to manage the entire fixed-asset lifecycle of for-profit businesses and non-profit organizations, as well as prepare year-end financials, allocate costs, calculate depreciation, eliminate redundant data entry, and store images of asset records.
- Tracking: With automated inventory functionality and built-in reconciliation capabilities, Sage Fixed Assets—Tracking makes keeping track of the items you use to run your business a whole lot easier.
- Planning: Tame your fixed assets before they even become fixed assets with flexible management of capital budgeting and in-progress projects.
- Reporting: Easily create custom reports, including charts and graphs with advanced formatting options.
The Road to Convergence Starts with OASIS
It can be intimidating to think about the long journey to fixed asset automation to support IFRS adoption. Read more about the differences in the two standards and the road to IFRS convergence in our white paper. When you’re ready, the specialists at OASIS can help you get up and running quickly with customized inventory and professional services as well as expert hands-on training. Contact the experts at Oasis Solutions today.
