(18)Discuss risks and relevant control objectives for Fixed Assets?
Answer: Fixed assets process ensures that all fixed assets
are tracked and fixed asset record maintains details of location, quantity, condition, and maintenance and depreciation status.
Typical steps of fixed assets process are as
follows:
(1)Procuring an asset:
- An asset is entered into the accounting system when the invoice for the asset is entered.
(2)Registering or Adding an asset:
- Information entered at this stage could include; acquisition date, installation date, description, asset type, cost basis, depreciable basis etc.
(3)Adjusting the Assets:
- Adjustments with respect to improvements or repairs made to asset that either adds value to the asset or extend its economic life.
(4)Transferring the Assets:
- Asset may be sold or transferred to another entity or department within the company. This needs to be reflected accurately in the fixed assets management system.
(5)Depreciating the Assets:
- Depreciation is an expense which should be periodically accounted on a company’s books, and allocated to the accounting periods, to match income and expenses.
(6)Disposing the Assets:
- Any disposals of the assets to be appropriately reported in the system.
