Fixed Assets

Internal Audit Report

Audit period: April 2019 – December 2019
Prior Years Audit Findings
 Inefficient insurance management process High
Observation:
Insurance management process not efficiently followed. Following instances noted:
a) 13 out of 14 cases, fixed assets costing around Rs 1.5 million (sum insured around 1.5 million), theft (as per fixed assets
register) over the period from year 2014 till 2019, however insurance claims of such assets are not yet
received/processed/initiated. Refer annex B4 for details.
b) No guidelines for valuation of assets insured. As a result, premium paid for period July 18 to June 19 on average approx.
Rs. 1.9 million instead of approx 1 million. It is observed that:
i. Insurance premium paid either on cost of assets or higher value instead of its respective book value.
ii. 102 Obsolete / damaged office & computer equipment are insured at its full / major cost valuing Rs. 6 million.
c) No monitoring / cross check over insured assets list shared by insurer. Instances noted where information with insurer
not matched with list shared by GSM which may result in a conflict at the time of claim.
d) As per clause 4.1, chapter 6 ‘Insurance management’ of Procurement manual, ‘Premium shall be paid on quarterly basis
to the Insurance Company’ however, payment for insurance premium is made on bi-annual in contravention with SOP.

Recommendation:
e) Matter should be investigated and proper action should be taken.
f) Guidelines should be prepared for assets insured in terms of it condition and value.
g) Proper monitoring should be done for accuracy of data/information against data/information forwarded to insurer.
h) SOP should be followed.

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 Inefficient insurance management process High
Management Response:
a) We have updated our response in the attached Annexure “B4”.
b) & c) Each custodian department is responsible for registration, listing, monitoring, safe keeping, valuation and disposal
of assets under their control. Guidelines for valuation are defined in respective departmental SOPs, Supply Chain shares
the information provided by custodian department with Insurer for cover.
d) This practice is as per negotiated terms and conditions and any change may affect Premium paid to insurance companies,
we are adding this contingency to our SOP to maintain flexibility in negotiations.

Responsibility for implementation: Head of Supply chain.

Status as at Dec 2019:

a) Not implemented
b&c) Not implemented
d) Implemented

Follow-up management response:

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 Inconsistent Fixed Assets procurement and disposal policy
Medium
in Finance and Procurement manual
Observation:
Certain clauses of Fixed Assets procurement and disposal policy of Procurement department is inconsistent with Fixed
Asset Management policy of Finance department. Below are the instances:
a) Inconsistent financial limits: Financial limit of Rs 25,000 for preparing Purchases Requisitions (PR) as required by
Procurement manual is inconsistent with financial limit of capitalizing fixed assets above Rs 15,000 as required by
Finance policy manual resulting in risk of un recorded CAPEX.
b) Conflicting disposal policies: Fixed assets disposal approval is based on Net Book Value (NBV) in Procurement
manual (chapter 5: ‘Stock Provision and Disposal Policy’), but same is based on cost of fixed assets in Finance policy
manual (chapter 7: ‘Fixed Assets’).

Recommendation:
c) Financial limit of Rs 25,000 for preparing Purchases Requisitions (PR) should be consistent with financial limit of
capitalizing fixed assets.
d) Disposal policy for fixed assets in Procurement manual and Finance department should be consistent with each other.

Management Response:
Finance:
e) In case of Capex items and above 15K it is necessary to raise the PR. This is already been followed.
f) Please advise to supply chain to amend the policy to be in line with the Finance manual.
Supply Chain:
b) We are amending our SOP for consistency with Finance manual.

Responsibility for implementation: CFO / Head of Supply Chain.

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 Inconsistent Fixed Assets procurement and disposal policy
Medium
in Finance and Procurement manual
Status as at Dec 2019:
a) Not implemented
b) Not implemented

Follow-up management response:

Finance:
a) Already followed- Point to be closed
Supply Chain:
b)

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 Annex B4:
Write-offs not recorded for missing, damaged, theft and obsolete assets
Date of Carrying
Date of
S. No Asset Id Description Acquisitio Cost value as at 30 FIR date Responses from Supply Chain
theft *
n April 2019
Information not received from concern
1 GSMP/FA-0001677 Tablet PC 30-Aug-16 17,200 7,740 18-Sep-18 18-Sep-18
person/department
Information not received from concern
2 GSMP/FA-0001817 IPAD Tablet 26-Feb-18 18,300 10,675   05-Sep-18
person/department
3 GSMP/FA-0002356 Tablet PC 19-Sep-18 14,389 15-Dec-18 19-Dec-18 Refused from Insurance e-mail attached
18,500
Suzuki Bolan (not
4 GSMP/FA-0000620 30-Jun-08 451,000 1 11-Aug-14 Documents not provide by Admin
CS-4606 provided) 
Suzuki Bolan Refused from insurance, e-mail
5 GSMP/FA-0000869 30-Nov-10 512,000 - 29-Sep-14 29-Sep-14
CT-1649 attached
Information not received from concern
6 GSMP/FA-0000972 BikeKFO-4104 29-Dec-11 92,000 1 7-Aug-14 7-Aug-14
person/department
7 GSMP/FA-0001203 Laptop 13-Mar-13 95,352 - 22-Jul-18 22-Jul-18 In Process e-mail attached soon
 (not
8 GSMP/FA-0001296 Laptop 12-Jun-13 65,000 -   Documents will be shared soon
provided)
 (not
9 GSMP/FA-0001317 Laptop 29-Aug-13 52,650 1   Document will be share soon
provided)
Information not received from concern
10 GSMP/FA-0001318 Laptop 29-Aug-13 52,650 1 05-Jul-17 05-Jul-17
person/department
11 GSMP/FA-0001320 Laptop 29-Aug-13 52,650 1   18-Nov-16 Document will be share
Information not received from concern
12 GSMP/FA-0001332 Laptop 29-Aug-13 52,650 1 23-Oct-18 01-Jan-19
person/department
13 GSMP/FA-0001613 Laptop 30-Mar-16 46,500 1   03-Jul-17 In Process e-mail attached

*As mentioned is FIR

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