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INVESTMENT & FINANCE CYCLE AND EFT PAYMENT CONTROLS - Coggle Diagram
INVESTMENT & FINANCE CYCLE AND EFT PAYMENT CONTROLS
Introduction
Finance & Investment Cycle
Relatively few Transactions
Transactions material
Fraudulent Reporting
Omissions
Overstating
Understating
Investment Activities :check:
Acqisition of assets
written, formal proposal by Capex Committee
Suported by quotes
Proposal presented to Board of Directors
Decison must be minuted
Levels of authorisation
Interests disclosed
Disposal of assets
Cash receipts
Trade-In Values
Management of assets (repair and maintenance)
Risk: treatment of expense
Important Docs
Capital Budgets
Fixed Asset requisition (with quotes)
Minutes of board of Directors
Invoices
Fixed Asset register
General Ledger
Financing activities :check:
Obtain funding
Owner's Equity
Issue of shares
Share buy backs
Statutory requirements
Authorisation for the issue of shares
Declaration of dividends
Borrowings
Cash inflow
repayments
interest
authorisations
Internal Controls, test controls and Control Objectives
Occurrence/Validity (all recorded assets are valid, exist and supported by documentation) :star:
Internal Control
Fixes asset requisition
Capital budgets
Periodically Compared
Test Control
Sample
Inspect supporting requisition
check capital budget exists
Check client procedures
Inspect proof of comparison
Authorisation :star:
Company policy authorised
Internal Control
Senior Management
numerical capital requesition
Recorded in Minutes
Test Control
Policy enquiry
Inspect Numerical documents
Confirm record in minutes
Completeness :star:
All valid fixed assets recorded and there are no omissions
Internal Control
Capital Requisitions sequentially pre-numbered)
missing numbers queried
Comparions between FA register and actual
Test Control
Inspect numerical sequence
proof of follow up to msising numbers
Inspect FA register
Accuracy :star:
All fixed assets are recorded at the correct amount
Internal Control
Invoice amount
Computer calculated depreciation
Independently reviewed calculation
Test Control
Enquire about recording procedures
Insoect assets are recorded as per invoice
Test functioning of programmed control
Recording :star:
Internal Control
purchases /sales recorded in FA ledger
Control account
Reconciled often
Test Control
Sample: follow through to source document
agree details
Inspect recon
Classification :star:
all transaction are correctly classified
Internal Control
Company Policy classification
Improvements capitalised
Test Control
Verify classification precedure
Review register for maintenance costs
Cut Off :star:
Transactions in correct period
Internal Control
Recorded as per GRN
Sold: date ownership passes
Test Control
Enquire cut off process
Select purchase and follow through to FA register
General Controls :star:
Assets safe guarded from damage
Internal Controls
Permamnet fixture
Safe guarded
Adequately secured
Test Controls
Observe safeguarding procedure
Investigate insurance policy
Confirm Insurance
Substantive Testing
Substantive Analytical Procedures
Compare Current FY
Financial and non-financial
Understanding core processes of entity
Detail Substantive Procedures
Examines Financial Statements
Compares/Checks supporting docs
Assertain that financial statements are complete, valid, accurate
Existence
Physical inspection
Inspect supporting docs
validate disposals
Scruitinise repair expense account
Completeness
Scruitinize minutes/contracts/leases
FA register
Accuracy
Rights and Obligations
Inspect underlying docs
Title deed/contracts/leases
Terms and Conditions
Review minutes of aquisition approval
Valuation
Revaluation of assets
Depreciation
Amortisation
Impairment
Presentation & Disclosure
Inspect statements
Ensure accurate reporting
EFTs
Controls
Multilevel passwords
Limited usage
Payment terminal control
Specific days
Completeness tests
2 users, 2 different passwords required
audit trail
Bank recon