How to Choose the Right ARO Software

Asset Retirement Obligation (ARO) Software is used by energy companies in order to best support asset retirement obligation accounting.  Energy companies employ ARO Software to automate data management, perform accurate accounting processes, and support regulatory reporting requirements.

The Financial Accounting Standards Board (FASB) requires companies to report data associated with retirement of tangible long-lived assets and the associated asset retirement costs as a result of acquisitions, construction, development, and the normal operations of a long-lived asset according to Statement No. 143 in the Statement of Financial Accounting Standards (SFAS). ARO accounting can be complex and monotonous, so companies use ARO Software programs as a more efficient and accountable solution.

Energy companies need to find the best ARO Software to support their accounting and reporting functions, and the following are key factors to keep in mind when choosing and implementing the program best-suited for your company:

  • The quantity and variety of assets your company needs to manage
Estimating the value of your assets can be a complex process, and it is even more challenging if you have a large number of assets, assets in various locations, assets of varying types, etc. Having a broad understanding of the capacity of data your ARO Software will need to manage is important, when choosing or customizing your system.
  • Your short-term and long-term business plans
The ARO accounting process will help your company make certain business decisions because it gives you an understanding of the value of your assets. Having a broad sense of your business objectives related to your assets, makes choosing the right ARO Software clear.  Then it can be directed and developed to match your desires.
  • The various constraints on your finances, operations, and management team
Implementing a custom ARO Software system can be highly valuable.  It can reduce the risks for error, save time, and cut costs.  Understanding your current business constraints can allow you to design or implement an ARO Software system that closely fulfills your needs.
  • Other risks involved, like potential transactions and the environment
Having perspective on other outlying factors that may affect ARO accounting will help you identify specific risks and requirements that your system will need to be prepared to manage.

Companies face many difficult business decisions every day, but choosing an ARO Software should not be difficult.  Your company can decide on the best asset requirement obligation system with confidence, if they keep the top decision factors in mind. Asset retirement obligation accounting is important, and the right ARO Software can relieve the stress, risks, and challenges involved.

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