• 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.

Owners equity the following activities must be considered:

• Issue of shares.
• Share buy backs
• Statutory requirements
• Authorization for the issue of shares and
• Declaration of dividends.

Borrowings following activities must be considered:

• Cash inflow from long-term/short-term borrowings received.
• Subsequent repayment of capital sum
• Interest charged on borrowings
• Authorization required for borrowings

Documents presented within the investment activities:

• Minutes of shareholders/directors: provide approval for share issue, debenture share buy-back, dividends declared
• Debenture trust deed: terms of debenture issue and rights & obligation of debenture holders.
• Prospectus - document prepared for public share offering containing all details regarding issue.
• Share certificate: evidence of ownership given to shareholder, detail number & type of share.
• Loan/lease contract: terms of loan/lease, amount, repayment terms interest rate and security.
• Mortgage bond: agreement signed over property to secure repayment of loan.
• Journal voucher: several entries made by journal - interest calculations, finance lease payments.

OCCURRENCE/VALIDITY:
All recorded assets are valid (really exist) and are
supported by proper documentation.

• All fixed asset purchases are supported by a fixed asset requisition and capital budgets.
• Recorded asses are periodically compared to physical assets by an independent senior offical.

AUTHORISATION:
All purchases and sales are authorized according to company's policy.

• All purchases and sales of fixed assets are authorized by senior management on a numerical capital requisition/ sales document.
• Authorization/decision recorded in minutes.

COMPLETENESS:
All Valid fixed assets are recorded and nothing is omitted.

• Capital requisitions are numerically accounted for.
• The list of missing numbers is regularly followed up.
• Fixed assets are recorded in a fixed asset register and are regularly compared with fixed assets.

ACCURACY:

• Fixed assets are recorded at the amount of the invoice.
• Depreciation and other calculations are done by the computer with a program which has been tested beforehand.
  

RECORDING:
All transactions i.r.o fixed assets and depreciation are correctly recorded.

• All purchases and sales 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.

CLASSIFICAITION:
All Transactions i.r.o fixed assets are correctly classified according to its nature.

• Fixed assets are classified into the respective categories according to company policy.
• Improvements are capitalized as fixed assets and clearly distinguished from maintenance.

CUT OFF:
All purchases and sales of fixed assets are recorded in the period to which it relates.

• Fixed assets purchased are recorded at the date of receipt (per GRN) and when sold as from the date that the risks and rewards of ownership passes to the purchaser in substance.

GENERAL CONTROLS:
Assets are properly safeguarded against theft and physical elements.

• Fixed assets are, as far as possible, stored in permanent form (bolted)
• safe guard asset by limited access to authorized person and controls protecting assets against physical elements.
• Asset adequately insured.