control obj for non-current assets

8/3/2019 Control Obj for Non-Current Assets

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NON CURRENT ASSETS

Non current assets include:-

plant and equipment,office furniture & fittings, computers,land & buildings andmotor vehicles.

These assets are normally extremely valuable, both indollar terms and their contribution to most businessorganisations.

Although non-current assets to many organisationsare large and difficult to remove, others are not, andtherefore it is important that strict control be maintainedover the entire range.


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CONTROL OBJECTIVES FOR NON-CURRENT ASSETSENSURE THAT:

Acquisitions are properly approved and authorised

All assets are properly recorded in the accounting records

Depreciation, amortisation and other related expenses areproperly calculated and charged to the correct accounts

The appropriate approval and authority is received beforethe asset can be disposed of

There is sufficient segregation of duties between theacquisition, disposal and recording functions

Management constantly reviews the organisations positionas regards non-current assets

Revaluations and devaluations are correctly recorded

Repairs & maintenance (including insurance) are correctlycarried out and recorded.


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CATEGORIES WHICH REQUIRE SEGREGATION OFDUTIES AND MAJOR CONTROLS

Controls over acquisition and recording

Controls over use, security and maintenance

Maintenance of asset register

Controls over sale or disposal


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ACQUISITION AND RECORDING

Non-current assets should be acquired only on the basis of anorganisations overall strategic plan and budget constraints

Different levels of management approval are required dependingon the assets value (major acquisitions would normally requirethe approval of the board of directors or management committee

A specially designed non-current assets requisition order is usedfor all non-current asset purchases

Controls should be maintained over construction and installationcosts

All acquisitions should be promptly and accurately recorded inthe general ledger and the non-current assets register

Title deeds, loan and security documents should be stored in asecure location

The methods for calculating and recording depreciation andamortisation charges should be constantly applied from oneaccounting period to the next


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USE, SECURITY AND MAINTENANCEOF NON CURRENT ASSETS

Assets should only be used for legitimate purposes Asset should not be used for an employees private benefit.

(Unless the appropriate authorisation has been received)

Asset should be protected from misuse, accidental loss or

theft. The existence of physical security controls such asguards, alarms, surveillance cameras, and permanentidentification labels help protect non-current assets

Assets should have adequate and up-to-date insurance

Asset should be regularly reconciled with the assetsregister


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CONTROLS OVER SALE OR DISPOSAL OF

NON CURRENT ASSETS

The responsibility for disposal should be reserved for asenior official who is independent of the acquisitions,recording and custody functions

Disposals or transfers should occur only on the writtenapproval of a senior official

The disposal should be reflected accurately in the

financial statements as either a profit or loss on disposal

control obj for non-current assets

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