Fixed Assets - Control Documentation

Control
Reference Sub Process Control Objective

FA - 1 Acquisition of Fixed To ensure authorized acquisition of fixed

Assets assets only.
FA - 2

FA - 3

FA - 4 To ensure proper documentation of

supporting for acquisition of Fixed Assets.

FA - 5

FA - 6 To ensure accurate capitalization of Fixed

Assets acquired.

FA - 7

FA - 8

FA - 9 To ensure accurate capitalization of Fixed

Assets acquired.

FA - 10

FA - 11
FA - 12 To ensure timely capitalization of Fixed
Assets acquired.

FA - 13 To ensure the avoidance of duplicate entries

for acquisition & payment of Fixed Assets.

FA - 14

FA - 15 Tagging of Fixed Asset To ensure identification of all portable Fixed

Assets location wise.

FA - 16 Depreciation/ To ensure accurate calculation of Useful Life

Amortization for correct calculation of Depreciation.

FA - 17

FA - 18 To ensure accurate calculation of Useful Life

for correct calculation of Depreciation.

FA - 19 To ensure accuracy of the Financial

Statements.

FA - 20

FA - 21 Disposal To ensure authorized disposal of disposal of

assets.

FA - 22 To ensure accuracy of the Financial

Statements.

FA - 23

FA - 24 To ensure accuracy of the Financial

Statements.
FA - 25 Physical Verification and To ensure the physical existence of Fixed
Maintenance Assets at each showroom.

FA - 26

FA - 27 Impairment To ensure accuracy of valuation of Fixed

Asset.

FA - 28 Transfer To ensure proper movement of Fixed Assets.

 Risk
Failure to comply with Company approval
limits and the approved budget for acquiring
Fixed Assets may result in procurement of
Unauthorized Fixed Assets
Failure to retain and maintain appropriate
supporting documentation for fixed assets,
may result in incorrect data updating in FAR. preparing a reconciliation statement between
Inaccurate booking of fixed asset against
inaccurate payments leading to misstated
financials
Failure to record Fixed assets purchase date,
location & cost may result in wrong
classification or may be booked under wrong
expense head leading to charging of incorrect
depreciation
As in Control
Showroom Manager approves the PR in case
of existing showrooms.
The Manager-Procurement Department or
President- Audit &Projects approves all the
purchases made.
In case of new showrooms, President- Audit
&Projects approves all purchases made as per
the approved predetermined list of asset
requirement.
Assistant Manager- Accounts identifies
discrepancy & requests supporting through
payments made and invoice booked by
Branch Accounts Executive.
Assistant Manager - Finance or President-
Audits & Projects approves all the supporting
available.
Assistant Manager - Accounts identifies
discrepancy & requests supporting through
preparing a reconciliation statement between
payments made and invoice booked by
Branch Accounts Executive.
The President- Audits & Projects approves
the payment for fixed asset purchased at all
Branch & HO.
MD is the authorized signatory for all the
payments
The Assistant Manager - Accounts approves
invoice booked by Finance Executive in
"SAP" thus, no fixed asset is capitalized until
the Assistant Manager - Accounts approves it
in SAP.
For location, the entries are made by the
Finance Executives at the respective
branches in their specific location modules.
The Assistant Manager - Accounts prepares
Fixed Asset Register maintained branch wise
monthly and vice president approves it.
Absence of effective measures to ensure
timely capitalization of Fixed assets may
result in inaccurate depreciation for the fixed
asset
The Assistant Manager - Accounts approves
invoice booked by Finance Executive in
"SAP" thus, no fixed asset is capitalized until
the Assistant Manager - Accounts approves it
in SAP.

Multiple billings/payments against the same The President- Audits & Projects approves
Asset resulting in financial loss to the the payment for the acquisition of fixed asset
organization at all the Branches & HO.
MD is the authorized signatory for all the
payments

The Assets Tag Numbers may not be affixed
to office furniture and fixtures, equipment
and other portable fixed assets.
Failure to consider appropriate expected
useful life of Fixed Asset may result in
establishing an unreasonable period for
amortization of fixed asset or the
corresponding depreciation
Asset tagging is done for all the additions
once in a year.
Assistant Manager-Accounts updates the
Fixed Asset Register and calculates the
depreciation after updating the expected
useful life of the assets as per Companies Act,
2013.

The Assistant Manager - Accounts enters the

final depreciation in the books of accounts as
per the FAR prepared.

Inaccurate identification of date of put to use The depreciation is calculated from the date
leading to incorrect computation of of put to use which is the date of booking of
depreciation. entry in the books.
Incorrect Journal Entry for depreciation may The Assistant Manager - Accounts enters the
result in misstatements in the Financial final depreciation in the books of accounts as
Statements per the FAR prepared

The BOD quarterly approves the financial

statements.
Failure to take approval as per ALM may Disposals are made on the basis of the
result in unauthorized and inaccurate approval of President- Audit &Projects
disposal of assets.

Failure to record any disposal of assets in the The Internal Auditors conducts the physical
system may result in misstatement of
information in Financial Statements
Failure to enter the receipt amount in the
books leading to misstatement in the
financial statements
verification of fixed assets quarterly and
reports the difference if any identified to the
Management.
The accounting entry is made as per the
discrepancy reported
The Assistant Manager-Accounts approves
the accounting entry made at respective
branch by Accounts Executive on monthly
basis.
In the absence of physical verification of Showroom Manager verifies all assets with
Fixed Assets by Branch Head, Inventory the list of assets on a monthly basis and
Manager and employees, actual existence of submits his report to Assistant Manager -
the assets may not be confirmed. Accounts at HO.

Failure to conduct the physical verification of The Internal Auditors conducts the physical
assets may lead to misstated financial verification of fixed assets quarterly and
statements reports the difference if any identified to the
Management.

Impairment of assets may not be identified Adjustment entry for the impairment of
assets is done on a yearly basis, if any, which
is on the authorization of CFO
Failure to record Physical Transfer JVs at any The Assistant Manager- Accounts keeps track
of the location leading to misstatements in record of each asset transferred from one
the Financial Statements. location to another.
 Control
Frequency Preventive/Detective Automated/Manual

Recurring Preventive Manual

Recurring Preventive Manual

Recurring Preventive Manual

Monthly Detective Manual

Recurring Preventive Manual

Monthly Detective Manual

Recurring Preventive Manual

Recurring Preventive Manual

Recurring Detective Automated

Recurring Detective Automated

Monthly Detective Manual

Recurring Detective Automated

Recurring Preventive Manual

Recurring Preventive Manual

Annually Detective Manual

Monthly Preventive Manual

Monthly Preventive Manual

Recurring Preventive Manual

Monthly Preventive Manual

Quarterly Preventive Manual

Recurring Preventive Manual

Quarterly Detective Manual

Quarterly Preventive Manual

Recurring Preventive Automated

Monthly Preventive Manual

Quarterly Detective Manual

Annually Preventive Manual

Recurring Detective Manual

 Test Steps Control Owner

For the selected sample, verify the approval Manager- Finance

of the Manager Procurement or President-
Audit &Projects.

For the selected sample, verify that whether

any discrepancy is found in the
procurement from the predetermined list.

For the sample month selected, verify that

the reconciliation statement is prepared
and the invoices are booked accordingly.

Verify the approvals of Assistant Manager - Manager- Finance

Finance or President- Audits & Projects on
supporting for acquisition of fixed assets
For the sample month selected, verify that
the reconciliation statement is prepared
and the invoices are booked accordingly.

For the sample selected, verify the approval Manager- Finance

of President- Audits & Projects on the
payments
Verify that MD is the authorized signatory Manager- Finance
as per the acknowledgment letter from the
bank or the board resolution.
Run a dummy transaction/ take a Manager- Finance
screenshot that no entry for capitalization
of fixed asset is made in SAP without the
approval of Assistant Manager - Accounts

Run a dummy transaction/ take a

screenshot that branch wise acquisition is
booked in their respective location modules
only
For the sample selected, verify that the Manager- Finance
Assistant Manager - Accounts has approved
the FAR
Run a dummy transaction/ take a Manager- Finance
screenshot that no entry for capitalization
of fixed asset is made in SAP without the
approval of Assistant Manager - Accounts

For the sample selected, verify that whether Manager- Finance

approvals are being taken from the
President for each payment.
Verify that MD is the authorized signatory Manager- Finance
as per the acknowledgment letter from the
bank or the board resolution.
Verify that the asset tagging has been done Senior Manager -
and the same sheet has been verified by Accounts
Senior Manager - Accounts
For the sample months selected, verify that Manager- Finance
the rates in the FAR prepared are in
agreement with the rates as per Companies
Act, 2013.

For the sample selected, verify that the

accounting entry of depreciation as per
books is in agreement with the FAR
prepared manually.
For the sample selected, verify that the date Manager- Finance
of put to use is the date of booking of entry
in the books.
For the sample selected, verify that the
accounting entry of depreciation as per
books is in agreement with the FAR
prepared manually.
For the sample quarters selected, verify the Manager- Finance
Minutes of Board Meeting.
For the sample selected, Verify the Manager- Finance
approvals of President- Audits & Projects
for the disposals made.

For the sample quarter selected, evaluate

the report of Internal Auditor to identify
that whether any discrepancy was
identified.

For the sample selected, verify that the Manager- Finance

Assistant Manager - Accounts approves the
booking of receipts including Gain or Loss
on disposal of fixed assets.
For sample month selected, verify that
Assistant Manager - Accounts approves the
monthly Fixed Asset Register

For the sample quarter selected, verify that Manager- Finance

a quarterly audit for physical verification of
fixed assets had been conducted

Verify the approval of CFO on impairment

entries

For sample month selected, verify that

whether transfer entries are passed in GL at
both the ends.