Fixed Asset Review

Scope: Review the adequacy and efficiency of current Capital Asset Management
polices and procedures as they relate to asset procurement, tracking and monitoring,
recording and reporting, disposal of assets, and depreciation.
Project Work Step Reviewer Comments
1. Conduct entrance meeting. Restate the scope and timing of
the audit; estalish a schedule for status meetings and
communication protocol.
!. Conduct interviews with the following individuals during the
course of the audit"
#i$ed Asset Manager
#inance %irector&Accounting Manager
Receiving %epartment Manager
'nformation Management %irector
Capital Asset #inancial Analysis representative
(. Capital Asset Procurement (Determine/Inquire about the
following):
Requisition & )urchasing
a* Are there dollar limit policies+ Are these policies followed+
* 's control over capital e$penditures maintained through a
regular system of authori,ations+ Are authori,ations
performed -online. or do they require written
documentation /or oth*+ 's there a signature authority
matri$ availale for use y appropriate personnel+ 0$plain
authori,ation process.
c* 's the udget reviewed for compliance+ 'f so, how often
and who performs the udget review+ 1ow is the review
documented+
d* Are written purchase requisitions and purchase orders
always issued+ Are there any instances in which a written
purchase order & purchase requisition is not used+
e* 's the purchasing function performed independently of the
receiving and recording of acquisition functions+
Receiving
f* 2hat is the process for receiving capital assets+ 1ow are
capital assets identified and differentiated from other
goods received+
g* 2hat are the controls of the asset receipt process+ Are
there proper segregation of duties, is there sufficient
written documentation /are shipping records date stamped
upon receipt, matched, and filed for easy reference*
showing receipt of item, is asset forwarded to appropriate
department on a timely asis+
h* 2here are assets stored after they are received, and are
they adequately secured+
3. Capital Asset Tracking and Monitoring (Determine/Inquire
about the following):
a* Are inventory numers assigned to individual pieces of
equipment /how are they assigned* and affi$ed securely to
the asset+ 2ho is responsile for keeping the log of
assigned inventory numers /manual or automated*+ Are
numers tied to fi$ed asset system+
* 2ho is responsile for ensuring that inventory of capital
assets is conducted in a timely manner+ 1ow often is
equipment inventoried and what are the procedures+ 2ho
supervises the inventory process+ %ate of last asset
inventory+
c* 4est" Check the 5eneral 6edger accounts against the
#i$ed Asset 6edger for consistency with the total net for
the most recent month end closing.
d* 4esting " 7n a scope asis, test 18 9udgmentally selected
capital assets from the #i$ed Asset 6edger for appropriate
tracking and monitoring. /a* 4race five items from the
6edger to the actual item on the floor and vice versa for
five more. /* 2ere the assets tagged with a visile asset
numer+ /c* Review completeness of asset records. /d*
2ere any e$ceptions noted+
e* 2hat control e$ists over items of minor equipment+ %o the
same ma9or equipment standards apply to minor
equipment+
f* 2hat are the policies for requesting, receiving, tracking
and recording a transferred asset
/interfaculty&intercompany transfers*+
:. Capital Asset Recording Reporting (Determine/Inquire
about the following):
a* 's there a current accurate count of all capital assets+
* %oes the facility have formal capitali,ation and
depreciation policies+
c* %oes the facility have standards for depreciale lives and
salvage values+
d* 4esting ; <elect a sample of : capital assets from the
#i$ed Asset 6edger and /a* assess their depreciale lives
and /* salvage values+ /c* 2ere any e$ceptions noted+
e* 2hat are the policies governing the distinction etween
e$penditures to e capitali,ed and those to e charged to
repairs and maintenance+
f* 2hat is the process to record the liaility for purchased
asset+ 's documentation received /)7, 'nvoice* efore
recording the liaility+ 0$plain.
g* 's account distriution determined at time of purchase
authori,ation, reviewed when recording the liaility and
when signing the check+
h* 1ow are detailed property records maintained+ 2hat
system is used /automated '< or manual*+
i* 4esting continued ; select a sample of : fi$ed asset
records and determine that each record includes" /a*
inventory numer, /* location, /c* a description and /d*
serial numer+ /e* 2ere any e$ceptions noted+
9* 's a detailed property record system integrated with the
general ledger system+
k* Are property ledgers regularly reconciled to the general
ledger control accounts+ 2ho is responsile for this
procedure+ 1ow often is this procedure performed+
l* %oes software have the following features"
)owerful automatic calculations+
Aility to track acquisitions and dispositions with ease+
Aility to navigate ma,e of regulatory, ta$ and
reporting requirements to reduce reporting errors+
Multi=depreciation planning options+
m* 1ow do you ensure that information is entered timely and
accurately+
n* Are appropriate control accounts maintained y locations
and y classes of property+
o* 's the issuance of inventory numers reconciled to
property additions+
p* Are property records ased on historical cost+ 'f assets
are not recorded at cost, are they recorded at historical
cost appraisal value or fair market value at date of gift,
when applicale+
q* 1ow are leased assets accounted for+ %o property
records indicate&classify etween leased and owned
assets+ 2hat types of leased assets does facility have+
r* 1ow is donated property or property purchased with
specific purpose funds accounted for+
s* 2hat is the policy for fully depreciated property+
t* 's it written off when it ecomes full depreciated+
u* 's it continued in the accounts until retired from service+
v* %o property records include fully depreciated assets still in
use+
>. Capital Asset !isposal Retirement (Determine/Inquire
about the following):
a* 2hat are the policies for disposing of assets+
* 2hat are the authori,ation policies for disposals+
c* 2hat are the policies for reporting items that are retired or
aandoned+ Are applicale gains&losses recogni,ed+
d* 's written authority required for removing assets from
facility premises+
e* 1ow are assets physically disposed of+ 's there a formal
policy in place+
f* 4esting" 7n a scope asis of five 9udgmentally selected
retired capital assets, determine the following"
2as asset retirement approved properly and timely per
facility policy+ 2ere any e$ceptions noted+
2as asset retirement properly removed from the
facility general ledger on a timely asis+ 2ere any
e$ceptions noted+
2as applicale gain&loss properly recogni,ed ?
reported on a timely asis+ 2ere any e$ceptions
noted+
2as asset physically disposed of&transferred properly
and timely+ 2ere any e$ceptions noted+
""# Final
1. Reporting Draft
)repare preliminary draft of the audit report using the standard
format.
!. Reporting Issuing draft
'ssue preliminary report to management for their comments,
and for their determination of action=item implementation
timing and who will e responsile for the implementation.
(. @alidate the accuracy of the report with the audit client. 4his is
an on=going step, with open communication occurring
throughout the review.