Customer Success Story: PotashCorp
Challenge:
To find an easy-to-use fixed asset management software that reduces the effort to calculate U.S. tax depreciation for PotashCorp's legal entities.
Solution:
BNA Fixed Assets™ Enterprise (Web-hosted)
Results:
PotashCorp cut four weeks off the tax preparation process and improved accuracy and reliability of information.
With BNA Fixed Assets Software, PotashCorp can now calculate U.S. tax depreciation in a third of the time it used to take
PotashCorp is the world's largest fertilizer enterprise, producing the three primary plant nutrients: potash, phosphate and nitrogen. For tax purposes, PotashCorp's 35 U.S. locations are combined into eight separate legal entities based on what product is being produced. Consolidating fixed assets information for these legal entities and preparing eight separate tax filings was taking more than six weeks and a tremendous effort for the tax staff at PotashCorp's U.S. headquarters.
Overly Complicated Tax Preparation for Fixed Assets
For book purposes, PotashCorp's fixed asset software met accounting's needs for straight line depreciation and units of production, but it was not as effective in meeting U.S. tax requirements.
One of the key issues was the way PotashCorp needed to consolidate its asset information: by legal entity, with multiple plants making up an entity. With the fixed asset software PotashCorp was using, the tax department had to run depreciation for tax purposes every month for every database at each plant location in order to compare AMT and regular tax at year end. "This very time-consuming process required the tax department to run 840 reports for regular tax and AMT. It took weeks to do this - it was an inefficient use of time," said Julie Burns, Federal Tax Manager at PotashCorp.
Compounding the problem was the fact that the databases didn't roll up automatically into a legal entity. This part was done manually by Burns and her staff by running additional reports, extracting information, and then entering the information into Excel to perform AMT and tax calculations.
In addition to the cumbersome consolidation process, there were other issues with the software that were causing tedious manual work:
- Any changes made to the databases meant re-running reports, extracting the data again, and reentering and recalculating in Excel for that particular location
- Incorrect asset entries couldn't be deleted, resulting in workarounds
- Manual changes and workarounds triggered additional effort to thoroughly document the adjustments for Sarbanes-Oxley compliance
- No what-if or forecasting capabilities meant guesswork on depreciation and tax planning
Justifying New Fixed Asset Management Software
After the 2003 filing season, the tax department decided it was finally time to act, so it set out to justify the expenditure of a new U.S. tax fixed assets system to senior management. Over the next several months, Burns and her department head documented the reasons why the current fixed asset management and depreciation software didn't meet the tax department's needs. They also defined what they needed in a new solution.
Once a business case was made that identified the deficiencies and resulting extra effort, the green light was given for the tax department to evaluate new software. The key criteria for the new solution were:
- The ability to consolidate by legal entity
- Accuracy of calculations
- Ease of use
A solution meeting these criteria would save extensive effort, improve reliability, and allow more time for researching and identifying potential areas of tax savings for PotashCorp.
BNA Fixed Assets Enterprise Beats the Competition
After evaluating three different fixed assets software solutions, PotashCorp chose the Web-hosted BNA Fixed Assets Enterprise solution. BNA Fixed Assets was the only fixed asset management and depreciation system that met all of PotashCorp's requirements, providing the flexibility and customization to support the consolidation the tax department needed. Plus, hosting by BNA Software meant that very little IT support would be necessary to support the new system.
"BNA Fixed Assets Enterprise lets me set up groups to support legal entities. Now we can set up each database as a legal entity and run depreciation and reports for each entity rather than each plant. BNA [Fixed Assets] automatically does the consolidation for me," said Burns.
Significant Time and Labor Savings with BNA Fixed Assets Software
PotashCorp found BNA Fixed Assets Enterprise to be much more intuitive to learn and use than the previous solution. This ease-of-use combined with BNA Fixed Assets' enterprise functionality enabled PotashCorp to reduce the amount of time it takes to calculate tax depreciation from six weeks down to two weeks. "We saved a month's worth of work and improved our accuracy with BNA Fixed Assets," said Burns.
In the previous system, PotashCorp was unable to delete asset entries that were inadvertently added. That meant retiring or disposing of the asset once the mistake was discovered. However, the old system calculated a loss on the retirement - which was incorrect. These errors resulted in PotashCorp having to extract the information to Excel, manually delete assets from the database that shouldn't have been entered, and then document the changes for Sarbanes-Oxley compliance.
No More Provisioning Guesswork
Before BNA Fixed Assets, U.S. tax depreciation projections involved extreme efforts. Now running depreciation, doing projections, and performing what-if scenarios to improve decision-making are all fast and easily done with BNA Fixed Assets. Burns and her staff are now able to do tax depreciation and forecasting with ease and accuracy.
Sarbanes Compliance Process a Snap
BNA Fixed Assets Enterprise has also meant a speedier Sarbanes-Oxley compliance process for PotashCorp - an area that can also be extremely resource intensive. Now that manual interventions are no longer necessary, the integrity of the financial process is enhanced and the reliability of information in the system has improved.
More Time for Strategy
With the new system from BNA Software, tax depreciation for each of PotashCorp's legal entities is now streamlined and automated, with greater accuracy and reliability. This has freed Burns and her staff in the tax department to spend more time researching and implementing tax optimization strategies.
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About BNA Fixed Assets Software
BNA Fixed Assets software provides you with the ability to document your depreciation and amortization policies through Asset Type templates and allows you to automate the enforcement and implementation of these policies when performing data entry for fixed assets. This eliminates potential errors from misclassifying assets, automates the process of entering assets, enforces the use of a company’s depreciation and amortization policies, greatly reduces the volume of data required to enter each asset in the system, and, above all, guarantees compliance with GAAP rules and IRS regulations.
BNA Fixed Assets provides an annual automatic update of its fixed asset management and depreciation software as well as periodic updates as tax law changes. What’s more, the fixed asset management software speeds the data entry process by allowing you to copy and paste data for multiple assets from an Excel spreadsheet into BNA Fixed Assets, for greater efficiency and accuracy. With BNA Fixed Assets, you’ll benefit from having the best solution available on the market today to maximize productivity, comply with GAAP rules and IRS regulations, and meet all of your financial and tax reporting requirements.
Learn more about BNA Fixed Assets Software »
About BNA Software
Founded in 1983, BNA Software develops professional software solutions for tax, accounting, and financial planning professionals. With category-standard software including BNA Income Tax™ Planner and BNA Fixed Assets, BNA Software is the solution of choice for accounting, law, and financial planning firms, as well as corporations of every size. More than 60,000 customers including the IRS, depend upon BNA Software for the highest degree of tax, regulatory, and compliance expertise available in the market.
