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Audit 31 Unit 1 Finance & Investment Cycle - Coggle Diagram
Audit 31 Unit 1
Finance & Investment Cycle
Finance Activities / Cycle
Financing / Funding
Owner's Equity
Share buy backs
Authorization for issue of shares
Issue of shares
Declaration of dividends
Borrowings
Cash inflow from long/short-term borrowings received
Subsequent repayment of capital sum
Interest charged on borrowings
Authorization required for borrowings
Investment Activities / Cycle
Disposals of fixed assets
Proceeds
Cash receipts / trade in values
Repairs & Maintenance of assets
Expensed or capitalized
Additions of fixed assets
Capex committee written proposal
Quotes and source of finance
Minutes of decission
Disclosure of board member direct interest
Purchase order and supplier invoice
Key Documents
Share certificate
Loan/lease contract
Prospectus
Mortgage bond
Debenture trust deed
Journal voucher
Minutes of shareholders/directors
Control Objective
Recording
Recorded in ledger accounts
Ledger recons to fixed asset register
Classification
Correct classification
Improvements capitalized
Accuracy
at invoiced amount
Computerized depreciation
Cut-off
Recorded on date of receipt
Completeness
Missing number list
Numerically accounted
Fixed asset register
General Controls
Safe and secure
Insured
Authorization
Authorization minuted
Occurrence / Validity
Supporting docs
Physical existence
Weakness, Risk, Recommendation
Organization decides to purchase a new asset, but have no proper authorization process.
Weakness
No authorization process to authorize the purchase of new assets
Risk
Purchasing of assets not needed
Recommendation
Implement proper processes to ensure that all purchases are authorized
EFT's
Recon
Independent from cashbook processing individual
Must be reviewed by senior independent individual
Payments
Mutilevel passwords - two employees
EFT payment access - one computer
Access control over terminal used
Transactions / transfers limited to specific day
Terminal shut down after 3 login attempts
Completeness test
2 passwords for payments
Audit trail
Payment must be on bank statement
Perform bank recon
Recon by person independent of EFT transactions