Discuss the fundamental risk and control issues associated with fixed assets that are different from raw materials
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Discuss the fundamental risk and control issues associated with fixed assets that are different from raw materials and finished goods.
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Authorization Controls Because fixed assets are requested and employed by endusers asset acquisitions should be formal and explicitly authorized Each material transaction should be initiated by a written request from the user or department In the case of highvalue items there should be an independent approval process that evaluates the merits of the request on a costbenefit basis Supervision Controls Because capital assets are widely distributed around the organization they are more susceptible to theft and misappropriation than inventories that are secured in a warehouse Therefore management supervision is an important element in the physical security of fixed assets Supervisors must ensure that fixed assets are being used in accordance with the organizations policies and business practices Independent Verification Controls a Periodically the internal auditor should review the asset acquisition ...View the full answer
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