Information Systems
Depending on the status of the information systems that are available in each organization, the outputs need to be treated with a degree of skepticism until their accuracy can be checked. In many cases the organization may have a preliminary or development inventory that may contain:
- All the assets operated by the organization
- The current replacement cost of these assets
- The approximate condition ranking
- The appropriate risk or consequence of failure of the asset
- An estimate of the residual life to replacement or rehabilitation
- An estimate of the cost of rehabilitation (if it differs from the replacement cost above).
These databases can be manipulated to provide information such as:
- A replacement/rehabilitation program and cash flow requirements (renewals accounting outputs)
- A priority program based on risk
- The current replacement value of the assets
- The book value of the assets
- Average annual annuities for the renewal program.
In general, databases are valuable management tools and can provide outputs that form the basis of a shift to renewal based accounting practices. However, it is our experience that it should only be used for "general trends" until the information is verified.