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Net Realizable Value

Kansas Department of Revenue. Valuation Method for Aging Tax Debts 2006 MSATA Presentation By: Jeff Scott, Executive Director of Compliance Enforcement Andrew Kapp, Accounts Receivable Manager. Net Realizable Value. Net Realizable Value (NRV) . What is NRV?

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Net Realizable Value

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  1. Kansas Department of Revenue Valuation Method for Aging Tax Debts2006 MSATAPresentation By:Jeff Scott, Executive Director of Compliance Enforcement Andrew Kapp, Accounts Receivable Manager Net Realizable Value

  2. Net Realizable Value (NRV) What is NRV? • Simply, NRV is predictive statistics. • A statistical probability of debt recovery based on each debt’s unique combination of variables or characteristics. • Probabilities are used to determine a realizable value of an inventory over a defined period of time. • Net... bankruptcy and bad debts are not included.

  3. Topic Outline • Building Valuation Models • KDOR’s Approach • Valuation Flow & Coding Scales • Valuation Example • Application Technique • Report Examples • Other Uses For Models • Discussion & Questions

  4. NRV Considerations • Method • Judgmental or Empirical (Statistical) • Continuous or Incremental • GAAP (Reporting) • Model Application • Data Warehouse • Reporting Software • Valuation Components • Tax Type • Age • Amount • Filing Frequency • Debt Source • Physical Location • Customer Profile • Business Type • Etc...

  5. KDOR’s NRV • Method • Judgmental or Empirical (Statistical) • Continuous or Incremental • GAAP (Reporting) • Model Application • Data Warehouse • Reporting Software • Valuation Components • Tax Type • Age • Amount • Filing Frequency • Debt Source • Physical Location • Customer Profile • Business Type • Etc...

  6. Debt Valuation Modeling Process Building Probability Models • Five years of historical data is extracted from KDOR’s collection system. • Extracted data is sent through a custom analyst process (data warehouse environment). • Each debt is coded according to it’s components. • Debts are compared to collection(s). • File is created describing incremental collections of each unique combination of debt components.

  7. Modeling Process Process Illustration Partial recovery is included.

  8. Modeling Process Process Illustration Historical Debt File Valuation File Debt Components

  9. Valuation File Valuation File - Report View

  10. Valuation File Alternative Use of Valuation File

  11. Valuation of Debt Application of Valuation File Reporting

  12. Reporting Examples

  13. Reporting Examples

  14. Report Utility Other Report Uses • Debt risk scoring • Strategy effectiveness over time • Taxpayer typology research • Employee performance • Test new collection strategies • Regional analysis • Agency performance benchmarking

  15. Report Utility

  16. Report Utility

  17. Contact Information:Jeff Scott -(785)-296-3321 jeff_scott@kdor.state.ks.usAndrew Kapp -(785)-368-7243 andrew_kapp@kdor.state.ks.us Questions and Discussion

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