Component Accounting Reconciliation
Updated: Feb 15, 2019
A number of disparities exist in the sector between component accounting and asset management system understanding of components, largely because:
Many arbitrary costs and install dates (largely unrelated to physical asset management records) were assumed when commissioning component accounting.
Standard lives used for component accounting are not necessarily the lives used for asset management
Historical component accounting costs are generally much lower than replacement component costs.
The above factors combine to create unexpected residual depreciation costs when components are replaced other than at the end of their accounting lives.
Obviously, it would be impractical to replace components at the end of their accounting lives because that is not how they wear out. Equally, it would be impractical to alter accounting lives to match them to unreliable component wearing out dates, not least because components age differently in different environments and may be replaced for different reasons.
Need help making early provision for these fluctuations?
Accepting continuing permanent differences, AspreyBI tools make it possible to predict otherwise unexpected charges on income & expenditure from apparent early replacement of components.
By mining data from both component accounting and asset management related systems and reconciling them within our predictive model.