AUTHORIZATION: Fixed Assets Objective, Error, Procedure

Objective Error Procedure

Plant additions, disposals, Assets may be purchased, or Prepare Written procedures for all
retirements should be authorized in sold without management additions, disposals and retirements
accordance with management’s knowledge, potentially resulting Periodically Compare scrap prices
criteria. in misapplied cash and received with published prices.
misstated fixed asset records
Assets may be disposed of or
sold at unfavorable prices,
potentially resulting in lost
resources.

EXECUTION: Fixed Assets Objective, Error, Procedure

Objective Error Procedure
Procedures for operating, using Unauthorized personnel mayEstablish procedures for operating,
and physically moving fixed Circumvent existing proceduresusing moving and otherwise
assets should be established in ,potentially resulting in Stolen, orcontrolling fixed assets;
accordance with management’s misused equipment
authorization. Equipments may be misplaced,Restrict access to movable fixed
potentially resulting in unusedassets
assets.

RECORDING: Fixed Assets Objectives, Errors, Procedures

Objectives Errors Procedures
Fixed asset Additions, disposals, orFixed assets transactions may goEstablish Procedures for processing
retirements should be recorded at theunreported, potentially resulting inand recording fixed assets
correct amounts, proper period andmisstated balances. transactions.
properly classified Establish Procedures for identifying
fixed assets eligible for disposal and
retirement.
maintain detailed fixed assets records
periodically reconcile fixed asset
records with existing assets and
investigate differences.
Depreciation and amortization shouldDepreciation could beEstablish Policies for determining
be calculated in accordance withmiscalculated or recognized ondepreciation methods and for
management’s authorization, befixed assets not in service,calculating depreciation on all
recorded in the proper period, and bepotentially resulting in misstatedcategories of fixed assets.
properly classified. depreciation expense and asset
book value.

ACCESS: Fixed Assets Objectives, Errors, Procedures

Objectives Errors Procedures
Access to fixed assets should beFixed Assets could be lost orEstablish Physical controls over unused
restricted to personnel authorized bystolen, potentially resulting infixed assets
management misapplied assets andMaintain adequate insurance coverage.
misstated accounts
Access to asset and records should beFixed assets and depreciation Establish physical controls over unused
restricted to personnel authorized byrecords could be misused,forms and records;
management restricted. destroyed, or lost, potentiallyPerform periodic compliance audits,
resulting in misstated assets. reconciling recorded assets with existing
assets.