30
October
2009
|
02:19 AM
America/Chicago
How much is your fleet really worth?
Johannesburg, South Africa - The line item in most South African businesses' balance sheets that indicates the value of their assets, particularly their vehicle fleet, is seldom more than an inaccurate "guestimate".
The financial and accounting implications of this should the asset need to be sold, replaced or insured can be significant.
That's the view of Mike von Höne, CEO at TransUnion Auto Information Solutions who says the methodology used by organisations to estimate the current value of their fleet by automatically depreciating the value of individual assets by an amount set in the company's depreciation policy has been recognised as inadequate.
Indeed, current International standards on asset accounting (IAS 16 and IAS 36) require companies to calculate the actual or 'fair' market value of the vehicles in the fleet when reporting their value in the balance sheet.
"Blanket depreciation calculations across an entire fleet fail to take account of the fact that different makes and models of vehicles depreciate at different rates," von Höne, says.
For example, TransUnion's data reveals that in July 2009 the difference between Trade and Retail pricing of some brands was as much as 18 percent, while for others, it was around 13 percent. These percentages change all the time.
"This variation could make a huge difference to the company's balance sheet should the company choose to dispose of vehicles. It also has an impact on the insurance cover required by the organisation," he explains.
In order to assist businesses to comply quickly, easily and accurately with "fair value" asset accounting provisions of IAS 16 and IAS 36 - and ensure the accurate valuation of their assets - TransUnion Auto has introduced a new Fleet Valuation Report service.
"The TransUnion Auto Fleet Valuation Report enables businesses to evaluate whether the company is depreciating its vehicles more rapidly than the Auto Dealers' Guide - the recognised benchmark in vehicle valuations," von Höne says.
To purchase a Fleet Valuation Report, companies simply provide TransUnion Auto with an accurate description of each vehicle in the fleet - its year, make, model, derivative, mileage, condition and vehicle code (as contained in the Auto Dealers' Guide) as well as the vehicle's current value on the balance sheet.
Armed with this data, TransUnion can then provide a monthly or annual report that shows its actual depreciation, reflecting its "fair" value. The report is provided in a PDF or Excel file for easy incorporation into the organisation's accounting system.
It can also include an indication of the trade value of the individual units in the fleet as well as for the fleet as a whole for defleeting purposes.
And when it comes to refleeting, TransUnion is also able to benchmark potential replacement vehicles against other vehicles in the same category that retain their value best according to trends revealed in its database. The TransUnion database of information on almost 12-million vehicles is obtained from manufacturers, importers and distributors of over 100 vehicle marques; 53 financial providers; as well from the 35 000 dealer submissions received by the company every month.
About TransUnion
As a global leader in information management, TransUnion creates advantages for millions of people around the world by gathering, analyzing and delivering information. For businesses, TransUnion helps improve efficiency, manage risk, reduce costs and increase revenue by delivering comprehensive data and advanced analytics and decisioning. For consumers, TransUnion provides the tools, resources and education to help manage their credit health, achieve their financial goals as well as make better informed decisions. Through these and other efforts, TransUnion is working to build stronger economies worldwide. Founded in 1968 and headquartered in Chicago, TransUnion has employees in more 25 countries on five continents.
TransUnion Auto Information Solutions is South Africa's leading provider of information solutions for the automotive industry. The company was established in 2005 following the merger of motorONLINE (est. 2000), TransUnion HPI (est. 1997) and TransUnion Mead & McGrouther (est. 1960).
The financial and accounting implications of this should the asset need to be sold, replaced or insured can be significant.
That's the view of Mike von Höne, CEO at TransUnion Auto Information Solutions who says the methodology used by organisations to estimate the current value of their fleet by automatically depreciating the value of individual assets by an amount set in the company's depreciation policy has been recognised as inadequate.
Indeed, current International standards on asset accounting (IAS 16 and IAS 36) require companies to calculate the actual or 'fair' market value of the vehicles in the fleet when reporting their value in the balance sheet.
"Blanket depreciation calculations across an entire fleet fail to take account of the fact that different makes and models of vehicles depreciate at different rates," von Höne, says.
For example, TransUnion's data reveals that in July 2009 the difference between Trade and Retail pricing of some brands was as much as 18 percent, while for others, it was around 13 percent. These percentages change all the time.
"This variation could make a huge difference to the company's balance sheet should the company choose to dispose of vehicles. It also has an impact on the insurance cover required by the organisation," he explains.
In order to assist businesses to comply quickly, easily and accurately with "fair value" asset accounting provisions of IAS 16 and IAS 36 - and ensure the accurate valuation of their assets - TransUnion Auto has introduced a new Fleet Valuation Report service.
"The TransUnion Auto Fleet Valuation Report enables businesses to evaluate whether the company is depreciating its vehicles more rapidly than the Auto Dealers' Guide - the recognised benchmark in vehicle valuations," von Höne says.
To purchase a Fleet Valuation Report, companies simply provide TransUnion Auto with an accurate description of each vehicle in the fleet - its year, make, model, derivative, mileage, condition and vehicle code (as contained in the Auto Dealers' Guide) as well as the vehicle's current value on the balance sheet.
Armed with this data, TransUnion can then provide a monthly or annual report that shows its actual depreciation, reflecting its "fair" value. The report is provided in a PDF or Excel file for easy incorporation into the organisation's accounting system.
It can also include an indication of the trade value of the individual units in the fleet as well as for the fleet as a whole for defleeting purposes.
And when it comes to refleeting, TransUnion is also able to benchmark potential replacement vehicles against other vehicles in the same category that retain their value best according to trends revealed in its database. The TransUnion database of information on almost 12-million vehicles is obtained from manufacturers, importers and distributors of over 100 vehicle marques; 53 financial providers; as well from the 35 000 dealer submissions received by the company every month.
About TransUnion
As a global leader in information management, TransUnion creates advantages for millions of people around the world by gathering, analyzing and delivering information. For businesses, TransUnion helps improve efficiency, manage risk, reduce costs and increase revenue by delivering comprehensive data and advanced analytics and decisioning. For consumers, TransUnion provides the tools, resources and education to help manage their credit health, achieve their financial goals as well as make better informed decisions. Through these and other efforts, TransUnion is working to build stronger economies worldwide. Founded in 1968 and headquartered in Chicago, TransUnion has employees in more 25 countries on five continents.
TransUnion Auto Information Solutions is South Africa's leading provider of information solutions for the automotive industry. The company was established in 2005 following the merger of motorONLINE (est. 2000), TransUnion HPI (est. 1997) and TransUnion Mead & McGrouther (est. 1960).
