Internal Control Checklist/Questionaires/Assessment On Fixed Assets

July 2nd, 2009 Comments off
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General

  • Procedures and policies for acquisitions, transfers and disposals of fixed assets should be established.  Fixed assets’ useful lives should be clearly defined and be consistent with the Group’s fixed assets policies. Operating units may have different policies subject to the Group Finance Director’s approval.

Fixed Assets Register

  • Each operating unit’s finance department must maintain a comprehensive and up-to-date Fixed Assets Register.
  • The register should include the following details:

Cost of asset
Asset useful life or depreciation rate
Location and custodian rate
Current and accumulated depreciation rate
Net book value

  • As far as possible all tangible fixed assets should be promptly tagged to permit easy identification.
  • Accuracy of the register should be verified through periodic physical fixed assets counts and confirmations with custodians.
  • All adjustments to the Fixed Assets Register should be authorised by the Finance Manager/Accountant after sufficient investigation.
  • Land, buildings and leasehold buildings should be revalued by independent professional valuers once every X years.
  • Fixed assets’ useful lives should be reviewed once every X years.
  • There should be adequate insurance coverage policy for fixed assets.

Fixed Assets Movements

  • All fixed asset movements should be approved in accordance with the authority limits.
  • Fixed Assets Transfer Form must be completed and acknowledged by the receiving department for all permanent transfer of fixed assets.

Fixed Assets Acquisition

  • Additions to fixed assets (including long-term leases) should be approved in accordance with the authority limits. For long-term leases, the total amount committed should be used as the amount determining the level of approval.
  • Fixed assets additions more than $1,000 (or FC equivalent) should be capitalised. Additions below $1,000 should be written off and monitored separately.
  • For acquisitions of fixed assets less than $10,000, the relevant departments should refer to a pre-selected list of suppliers whom have been reliably evaluated for quality every x years.
  • For acquisition of fixed assets more than $20,000, three quotations should be obtained.
  • For contracts that cost more than $500,000, the open tender system should be adopted with a minimum of three quotations.
  • Any variation orders more than 10% of the original approved contract should be re-approved in accordance with the authority limit.

Fixed Assets Disposal

  • Fixed assets disposals should be authorised in accordance with the authority limits.

Reconciliation

  • Fixed Assets Register should be reconciled to the GL on a monthly basis.

Segregation of duties

  • There should be segregation of responsibilities between the following functions:

Fixed assets custodians
Approving authorities for fixed assets movement
Maintenance of fixed assets account
Fixed assets verification

Fixed Assets Count

  • Physical fixed assets at all locations should be counted and checked against book records at least once every two years.

  • Differences between fixed assets counts and book records should be investigated
  • Thoroughly before adjustments are approved and made to the books.  Results from the investigation should be documented and reported back to Head Office.

Delegation of Authority (DOA)

  • Appropriate delegation of authority guidelines for Fixed Assets management should be documented.
  • The documented DOA should cover the authority to:
  • Acquisitions, transfers and disposals
  • Fixed assets write off
  • Comments are closed now.

    Financial Accounting

     
     

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