【正文】 ater precision, limiting any negative impact on the pany39。s overall performance. Top management can strengthen credibility with stakeholders. By keeping stakeholders informed of changes in tactics or strategies, top management assures them that the pany39。s longrange goals are still achievable. In the budget development process, knowing that the budget can acmodate change frees managers from the need to pad their budgets to cover unforeseeable developments. Best Practice Rationale Develop Budgets 56 169。 2023 Arthur Andersen All rights reserved. Best Practice Assign accountability for capital budget performance Tie performance incentives to the capital investment strategy Incorporate scenario planning, portfolio analysis and other evaluation tools into capital investment planning process Rationale Often we find that budgets are set, but little monitoring of budget performance (variances) is performed. Moreover, if budgets vary widely (negatively), lack of accountability can contribute to enterprisewide underperformance. Most of the decisions affecting capital investments are made by line managers and employees. Each day, pany executives rely on their employees to implement the guiding strategiesand the decisions employees make affect how and where capital is invested. Performance measurement systems and incentive plans ensure that employees execute the investment strategies effectively by tying employee interests to the capital investment strategy, aligning employee and pany interests in ways that promote valuebuilding investment decisions. Companies need to test the impact of spending (and of not spending) in order to determine the true value of the capital investments being made. Establish a formal and consistent method for ranking, paring and selecting investment projects Track asset condition and age profile and link to capital planning profile Competent Capital Project Evaluation Team Investment decisions are often driven by those managers who hold more influence over their peers, and driven less by their contribution to pany strategic goals. Providing a formal process for scoring and paring projects allows the pany to make better, more equitable capital allocation decisions. Asset condition, age profile and other asset characteristics should feed into the planning process when making capital allocation decisions. Capital evaluation personnel should be skilled in various areas such as economic modelling (discounted cashflows/NPV), scenario analysis etc. Manage Capital Planning 57 169。 2023 Arthur Andersen All rights reserved. Best Practice Rationale Select core cash management banking partners. Service has replaced price as the determining factor for selecting a cash management bank. Since many of today39。s cash management banks have reached parable levels of technological petence, reliable, highquality service is the yardstick panies now use to select banking partners. And partners is the key word. Today panies consolidate their accounts and use fewer banks. They partner with these select few banks to explore innovative ways to streamline and automate processes, to improve information flow, and to lower costs. Develop accurate cash forecasting models. Because cash flows are neither certain nor synchronized, panies turn to forecasts to reduce uncertainties and to help time disbursements with ining receipts. Some businesses use forecasts to look for cash surpluses so that they can decide how much and for how long to invest excess cash. Other businesses use them to foresee cash shortfalls so they can plan how much and when to borrow. Specifically, cash forecasts help determine: frequency of funds transfers。 amount of funds needed pany39。s ability to prepay debt。 foreign exchange and hedging strategy and shortterm investment strategy. Review cash management system regularly. The cash management or treasury review evaluates how well the cash management system is performing. These reviews may be conducted in response to internal or external forces affecting the pany, to identify existing processes that can be improved, or as a recurring tracking measure. Reviews provide some assurance of the reliability of financial data without conducting an examination in accordance with generally accepted accounting principles or audit. Manage Cashflow 58 169。 2023 Arthur Andersen All rights reserved. Best Practice Rationale Implement a prehensive and flexible fixed asset software program. Software designed specifically for asset management and depreciation putations has bee essential because of the everchanging regulatory and management reporting requirements of fixed asset accounting, the plexity of current tax laws and the sheer volume of asset acquisitions and disposals Today39。s programs feature powerful automatic calculations and greatly reduce reporting errors. Carefully chosen and monitored, these programs allow managers to make more informed decisions, trim operational costs, and help users avoid the endofyear rush by updating fixed asset schedules quickly. Track inventory and maintenance of fixed assets. A key principle of asset management is that an asset cannot be managed and its associated costs cannot be controlled if there is no indication that the asset exists. With the continuing emphasis on managing costs and maximizing equipment usage, accounting managers and controllers must know the status of all fixed assets. Careful tracking through bar code technology and reconciliation to a puterbased data repository provide continuous realtime information regarding location, description, and history of all assets. Establish standards and policies for capitalization, depreciation, and maintenance of fixed assets. When fixed asset costs exceed budget it usually means that effective controls hav