Moderated by Sherry, Financial Technology Consultant at Hyperbots
Sherry: Hello, and welcome to all our viewers on CFO Inside. I am Sherry, a financial technology consultant at Hyperbots, and I’m very excited to have Shaun Walker here with me, who is a seasoned internal audit leader with a wealth of experience in driving risk management, compliance, and governance initiatives across diverse industries. Thank you so much for joining us today, Shaun. Let’s dive right into our discussion on structuring asset heads in the chart of accounts. My first question to you is, can you explain why structuring asset heads correctly in the chart of accounts is critical for a company’s financial management?
Shaun Walker: Sure. So I’d say the main thing is that it directly impacts financial reporting, which influences decision-making and regulatory compliance. Decision-making relates to asset utilization, depreciation, investment needs, and also compliance with accounting standards.
Sherry: And how do asset structures in the chart of accounts vary across different industries? And why is this variation important?
Shaun Walker: Yeah, for example, in a manufacturing company, there will be a lot of fixed assets. In a SaaS company (software as a service), there will be more intellectual property and software. You need to differentiate between those two.
Sherry: To talk about some of the proven methods, what are some best practices for structuring asset heads in the chart of accounts?
Shaun Walker: The main things would be categorizing by liquidity and usage, maintaining consistency across periods to help with trend analysis and comparability, and using detailed sub-categorization to better track depreciation, impairments, and utilization. From an audit perspective, regular reviews are important—periodically updating the chart of accounts to reflect acquisitions, disposals, or changes in accounting standards. Lastly, aligning the asset structure with industry standards ensures relevance and compliance.
Sherry: Drawing from your experience, can you tell us some common mistakes you’ve seen accountants make when structuring asset heads in the chart of accounts?
Shaun Walker: Sure. One common mistake is misclassification, such as placing a long-term asset under current assets. Another issue is the lack of granularity—grouping all assets under one broad category instead of making it more specific. There’s also failure to make updates, incorrect asset valuations (especially for intangibles like goodwill), and inconsistency in categorization, which can reduce the reliability of the data.
Sherry: As AI reshapes the future of finance, how can AI help improve the management of asset structures in the chart of accounts?
Shaun Walker: AI can automate processes, saving time and reducing human error by automatically categorizing assets based on characteristics and usage. It can also evaluate intangibles and continuously monitor asset values, providing real-time updates and ensuring accuracy. AI can detect anomalies, such as sudden changes in asset values or unexpected disposals, and recommend asset allocation or disposal strategies to maximize efficiency.
Sherry: From what you’ve observed in your years in the industry, can you give us an example of how a specific industry could benefit from AI in managing asset heads in the chart of accounts?
Shaun Walker: Sure. In the healthcare industry, for instance, providers deal with a wide range of fixed assets, such as medical equipment, and intangible assets like patient databases. AI can optimize the categorization of these assets, leading to more accurate financial statements, better asset management, and improved financial decision-making.
Sherry: What role does regular review and updating of asset heads play in maintaining an effective chart of accounts, and how can AI assist in this process?
Shaun Walker: Regular review ensures that the chart of accounts accurately reflects the current asset status and values, including acquisitions, disposals, depreciation, and changes in market value. AI can continuously monitor asset data, identify discrepancies, and suggest updates, ensuring the chart of accounts stays accurate and up-to-date.
Sherry: What advice would you give to companies looking to implement AI solutions for managing their asset structures in the chart of accounts?
Shaun Walker: First, understand the challenges in your current asset management and identify areas where AI can add the most value, such as classification, valuation, and anomaly detection. These are crucial for maintaining efficiency and data quality. Regularly assess how AI can support your processes as business needs evolve because AI can adapt along with them.
Sherry: Thank you so much, Shaun, for these valuable insights on managing asset structures in the chart of accounts. This discussion will certainly help many companies optimize their financial management practices using AI.
Shaun Walker: Absolutely, glad to be here. Thanks for inviting me. I enjoyed sharing my expertise. Thank you.
