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Investment and Finance Cycle - Coggle Diagram
Investment and Finance Cycle
Overview
Both these functions are integral to the functioning of financial activities
Invesntment cycle focuses on individual and investment decisions
Finance cycle focuses on the raising of funds, use of funds and authorization
Functions of Investment Cycle
Research and Analysis - analyze financial statements
Decision making - make informed decisions
Execution - buying or selling assets
Monitoring - monitor the performance
Review and Adjustment - review the portfolio
Functions of Finance cycle
Capital formation - rasing capital/funds
Financial planning - develop financial plans
Budgets - manage income and expenses
Risk managment - identify financial risks
Financial transactions - manage day to day cash flow
Financial reporting - produce financial statements
Audit and Compliance - adhere accounting rules
Documents used in the cycle
Capital Budgets
Fixed Assets requisition with quote
Minutes of Board Directors
Invoices
Fixed Asset register
General Ledger accounts
Control Objectoves and Internal Control
Occurence/ Validity - assets surpported by proper documentation
Authorisation - all sales are authorised
Completeness - fixed assets are recorded
Accuracy - fixed assets are recorded and correct
Recording - all transactions are recorded
Classification - all transactions are classified
Cut off - all purchases and sales are recorded
General Controls - assets are safeguarded
Example of weakness/ risk
Scenario - An organisation decides to purchase a new asset, but they do not have a proper authorisation process.
Weakness - there is no authorisation process to authorise the purchase of the new asset
Risk - the organisation will be purchasing assets that they do not need.
Substantive testing
Existance - items from a fixed asset register
Rights & Obligations - inspect documents, review minutes
Valuation - assets are valued by experts
Completeness - examine minutes/ and entries
Presentation & Disclosure - inspect financial statements