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UNIT 1 INVESTMENT AND FINANCE CYCLE AND EFT PAYMENT CONTROLS, Examples…

- - - - General Ledger accounts:
        
        Fixed assets
        
        Depreciation
        
        Profit/Loss on disposal
        
        Accumulated depreciation
      - Fixed Asset Register
      - Invoices (purchases and sales)
      - Minutes of board of directors
        (authorisstion of purchases and sales)
      - Fixed asset requisition with quote/negotiated prices.
      - Capital Budgets
    - - Additions of fixed assets
        
        Formal written proposal by a Capex Committee must be completed
        
        the proposal must be supported by quotes and the required source of finance.
        
        The proposal must then be presented to the board of directors.
        
        The decision taken by the directors must be minute.
        
        In large organizations different levels of authorization must be obtained for the acquisition of assets
        
        if any director has as interest in a contract for the purchase of assets, this interest must be disclosed.
        
        With the approval of the purchase of an asset, the usual issue purchase order/delivery note from supplier/invoice will be used as supporting documention.
        
        In some cases a formal signed contract is required for the purchase of the asset.
      - Disposal of fixed assets:
        
        The proceeds from disposals usually take the form of:
        cash receipts or trade in value
        
        Normally entities have less formal controls around disposal of
        their assets and therefore the accurate accounting cam ne overlooked.
        
        The major risk of disposal relates to the fact that disposed assets can still be reflected as assets in the statement of financial position in an attempt to overstate assets.
      - Repair and maintenance of assets
        The major concern within the repair and maintenance activity
        of the investment cycle is the risk that costs incurred for repair and maintenance are incorrectly treated. The risk exists that items are capitalized instead of expensed in the attempt to overstate profits or that an item is incorrectly expensed instead of capitalised.