Areas of Concern

Based on the document flowchart depicting the fixed asset transaction cycle of the
company, the following differences between the companys employed practices and the
prescribed procedures in fixed asset system were discovered:
There is only one person who performs the purchasing, receiving, and recording
of fixed assets of the company. Since capital asset acquisition is not a routine
transaction in relation with the companys nature, non-segregation of these duties
does not cause great disadvantage to the company.
Because of the small number of fixed assets that the company own, subsidiary
ledger for these assets is not maintained. This practice might cause difficulty for
the company in the mere future upon happening of unforeseeable events that
might require reconciliation of its records.(insert more effects)
.
Fixed assets of the company are not indicated with labels. It might raise
questions as to who bears the accountability for these assets. .(dili q xure ani)

The company has no specific vendors from whom capital assets are acquired,
thus, there is a need of canvassing for the right combination of price and quality
of items purchased. It gives an opportunity for the company to choose from those
who offer favourable price without compromising the quality of the desired
item.(dili q xure ani)

Assets are disposed by the user department once they are found to be idle, and
theres no need to obtain proper approval from the office head. Disposals of
assets are communicated to the recording function, so that the related asset
account be removed in the general ledger. This might lead to improper retirement
of assets when its usefulness is mistakenly judged.

(dungagi nalang sam, murag naa pay kulang)
Physical Controls
Physical Controls

Transaction authorization

Authorization for acquisition of fixed assets is performed by the
office head by signing the purchase requisition for the needed
item.
Approval for the actual disposition of assets is not required.
Once the user department has identified that a specific asset is
idle or have no use, it can be immediately disposed or retired.
The user department communicates to the recording function to
authorize removal of the disposed asset in the general ledger
account.

Segregation of duties

There is no segregation of duties in terms of purchasing,
receiving and recording of fixed assets. These function is
performed by only one personnel
Supervision

Since the company is comprised of very few employees, general
supervision is performed by the office head.
Accounting records

The company has established records for open/close purchase
order .
Fixed asset are directly recorded in general ledger when they are
acquired and removed when disposed.
Subsidiary ledger for fixed assets is not maintained
Depreciation schedule is maintained by the company to keep
track on asset changes.
Access control

Accounting records that pertain to fixed assets are in the custody
of the person who performs the procurement and accounting
process.
independent verification

There is no independent verification of transactions since the
task of preparing purchase order to the recording of fixed assets
is performed by only one employee.

Recommendations
Non-segregation of duties from purchasing to recording of fixed assets appears to be
practical since the company has only few employees and considering its characteristic
as a family-owned company. However, sufficient degree of supervision must be
employed by the company to avoid misappropriation of assets, and ensure that these
assets are only subjected for their intended use.
Fixed assets of the company should be assigned with tags or codes for identification
purposes(for the xhaaar)
The company should maintain fixed asset subsidiary ledger for accounting trail purposes.it is
needed for reconciliation of records to verify that all fixed assets that the company own are
properly accounted for.
Approval for disposal of asset from higher level management must be obtained to avoid
improper disposition of fixed assets. This would enable the company to utilize its asset
efficiently.