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Property Plant & Equipment - Coggle Diagram
Property Plant & Equipment
Process
Request a Purchase (buying laptop, desks, etc)
Approval Process (who approve the request? level of delegated authoroty) --Bigger the speding, then also bigger the evidances necessary and bigger the layer of approval --Notify accounting
Ordering by Purchasing dept
Receive PPE
Notify accounting
get the PPE into the FAR (fixed asset register) and for that the acquistion cost (which includes the price + insurance for delivery + delivery costs + setup + instalattion + training)
Sell or Dispose of PPE: (Approval, quoter, Removed from FAR, gain/loss on sale of PPE)
writting off PPE
Controls
The approval process at the request
The approval process at the PPE getting ginto the FAR (controlling the total acquistion cost)
Look out for segreation of duties
Internal Audit
General Audit points
Select a sample of PPE acquired during the FY and vouch back to documentation that approves the purchase.
Check if the approver has the appropriate level of authority
Select a sample of disposed assets and gather documents, and look for evidance of approval
Substantive procedures
Existence
Vouch (vouching means starting with the accounting records and folowing back to the supporing documentation or real asset) a sample of PPE from the FAR and physically inspect the items
Accuracy/valuation + allocation
Select a sample of PPE acquistion and trace to inclustion on the FAR, cehck the costs included in the acquistion and recalculate it
Net value - accumulated depreciation - select a sample and recalculate and re estimate the depreciation (MAD- Method (how it is calculated) Assumptions (which assumptions were take in consideration, and if they make sense) and Data
Check that journal entries are being recorded connecty in line with the chart of accounts
Disposals: Check that item has been removed from FAR, gain/loss on sale has been recalculated.
Completeness
Checking whether PPE we see can be found on the FAR
Rights + obligation
Check purchase contracts for PPE. Was the PPE leased?
Check
we can check the values and reconciliate, Trial balance, GL and last but not least Fixed asset register