NON CURRENT ASSETS

Non current assets include:plant and equipment, office furniture & fittings, computers, land & buildings and motor vehicles. These assets are normally extremely valuable, both in dollar terms and their contribution to most business organisations. Although non-current assets to many organisations are large and difficult to remove, others are not, and therefore it is important that strict control be maintained over the entire range.
1

CONTROL OBJECTIVES FOR NON-CURRENT ASSETS ENSURE THAT: Acquisitions are properly approved and authorised All assets are properly recorded in the accounting records Depreciation, amortisation and other related expenses are properly calculated and charged to the correct accounts The appropriate approval and authority is received before the asset can be disposed of There is sufficient segregation of duties between the acquisition, disposal and recording functions

Management constantly reviews the organisations position as regards non-current assets

Revaluations and devaluations are correctly recorded

Repairs & maintenance (including insurance) are correctly2 carried out and recorded.

CATEGORIES WHICH REQUIRE SEGREGATION OF DUTIES AND MAJOR CONTROLS

Controls over acquisition and recording Controls over use, security and maintenance

Maintenance of asset register

Controls over sale or disposal

ACQUISITION AND RECORDING

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

Different levels of management approval are required depending on the assets value (major acquisitions would normally require the approval of the board of directors or management committee
A specially designed non-current assets requisition order is used for all non-current asset purchases Controls should be maintained over construction and installation costs All acquisitions should be promptly and accurately recorded in the general ledger and the non-current assets register Title deeds, loan and security documents should be stored in a secure location The methods for calculating and recording depreciation and amortisation charges should be constantly applied from one accounting period to the next

USE, SECURITY AND MAINTENANCE OF 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 as guards, alarms, surveillance cameras, and permanent identification labels help protect non-current assets Assets should have adequate and up-to-date insurance Asset should be regularly reconciled with the assets register

CONTROLS OVER SALE OR DISPOSAL OF NON CURRENT ASSETS

The responsibility for disposal should be reserved for a senior official who is independent of the acquisitions, recording and custody functions Disposals or transfers should occur only on the written approval of a senior official The disposal should be reflected accurately in the financial statements as either a profit or loss on disposal