CPCON Group assisted VALE’s (NYSE) management in addressing certain accounting and operational challenges related to fixed asset management to satisfy their financial reporting and regulatory compliance requirements. As the world’s largest ore and nickel producer, VALE utilizes from a highly complex logistics system – that integrates mines, railroad, ships, and ports in the Americas, Middle Eastern and Asia; operating approximately 1,242 miles of railroad network and carrying third-party cargos and trains –to efficiently transport their commodities. This logistics structure challenged internal control and proper documentation of asset movements and records, as increased transactions and information bottlenecks may occur.
CPCON Group served as an independent fixed asset advisor to VALE’s CFOs, Controllers, Fixed Asset Accountant, and Property Managers (technical support). The first step was to conduct a detailed physical inventory of 200,000+ enterprise assets over 55 sites, as well as labeling untagged items with a unique barcode. While on-going operation (24/7) and strict internal policies could burden data collection, we implemented an extensive cooperation and communication between our team and the client to ensure a fortified and complete report. Not only did the enterprise have to suit financial reporting requirements in accordance with IFRS and SOX standards, but also to satisfy regulatory compliance imposed by government agencies in their countries of operations – such as, the Brazilian Department of Transportation (ANTT) – in order to renew lease agreements.
After collecting and detailing the asset data (descriptives, categories, location, etc.), we reconciled inventory to the asset accounting records. As discrepancy report was prepared, each asset was verified either as a match, retirement or addition. Surprisingly, many enterprise assets, that had been long retired, were not properly reported to managers, existing in the register, which underlines the importance of undertaking periodic inventory and reconciliation procedures. At this time, we had cleansed the entire asset database and forward it for the client’s adjustments on unmatched assets. The final report was formatted and delivered in the layout required to populate SAP AA (ERP) software.
Additionally, we have designed and implemented an efficient asset management plan to avoid further inventory discrepancy and miscommunication issues by creating inventory routes, standardizing asset classifications in SAP AA & PM modules, and streamlining data collection. Ultimately, our conclusions had the client’s approval and were accepted by oversight agencies, also followed by a certification of competency signed by the client’s key
About VALE (NYSE)
Founded in 1943, Vale S.A. is a global integrated business enterprise with over 72,000 employees that produces and sells metal resources (iron ore, gold, nickel, cooper, etc.) and operates railroads and maritime terminals in approximately 30 countries and 4 regions around the world. Vale is listed in Fortune Global 500 the New York Stock Exchange (NYSE).