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Investment and Finance Cycle - Coggle Diagram
Investment and Finance Cycle
Internal controls
Control
activities
that the organization should implement to ensure that they achieve their goals
Therefore, implemented in order to achieve control objectives
Occurrence / validity:
All recorded assets are valid (really exist) and are supported by proper documentation
Fixed asset purchases are supported by supporting documents
Recorded assets are periodically compared to physical assets by an independent senior official.
Authorisation
:
All purchases and sales are authorised according to company’s policy
Purchases and sales of fixed assets must be authorised by senior management on a numerical capital requisition or sales document
Authorisation must be recorded in the minutes of the Capex Committee meeting
Completeness
:
All valid fixed assets are recorded and nothing is left out
Capital requisitions are in numerical order and missing numbers are followed up regularly
Fixed assets are recorded in a fixed asset register and are regularly compared with the actual fixed assets
Accuracy
:
All fixed assets are recorded at the correct amount and are arithmetically correct
Fixed assets are recorded according to the amount of the invoice
Depreciation and other calculations are done by computer with a program which has been tested beforehand and if calculation are performed by hand, they are independently reviewed)
Recording
:
All transactions of fixed assets and depreciation are correctly recorded
All transactions of fixed assets are recorded in the fixed asset ledger accounts (control account) and fixed asset register from the source documents
The fixed asset register is reconciled with the control accounts in the ledger on a regular basis
Classification
:
All transactions of fixed assets are correctly classified according to its nature
Fixed assets are classified according to company policy
Improvements are capitalised as fixed assets
Cut
off
:
All transactions of fixed assets are recorded in the period to which it relates
2 more items...
Control objectives
Objectives which the organization want to achieve
Weakness
Lack of internal controls
May lead to risks
Recommendation
When there is a lack of internal controls, recommendation on how to implement the appropriate internal controls are necessary.