16 August 2010
please provide me internal control checklist or questionnair to keep in mind while auditing internal control system of the company relating to fixed assets
16 August 2010
YOU HAVE TO CHECK IN DETAILS 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.
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