Fixed Asset Cycle
|Objectives||Risks||All fixed asset transactions are initiated by authorized individuals in accordance with established criteria.||Fictitious purchases or payments to contractors or suppliers, with or without kickbacks to employees.
Purchases from vendors whose interests are in conflict with the organization.
Purchases of unnecessary assets.
Disposal or scrapping of serviceable assets.
Purchases of assets which do not meet established quality standards.
|Advance approval is obtained for all significant fixed asset transactions.||Unauthorized purchases, construction contracts or leases with companies or individuals related to executive or legislative representatives.
Purchases from related parties without the knowledge of senior officials.
Delay or cancellation of a project due.
Expenditures in excess of originally approved amounts without review and approval.
|Adequate project cost records are maintained, and in progress and completed project reports are issued.||Actual costs that exceed budgeted amounts.
Overpayments to contractors.
Misclassification of costs between capital and operating budgets.
|All fixed assets are accurately recorded in detail records which are compared with existing assets at reasonable intervals. All fixed assets are adequately safeguarded.||Use of equipment or other assets for other than the unit of government's benefit.
Theft of tools and equipment, maintenance or supply parts.
Payment of insurance on assets no longer owned.
Unauthorized disposals of assets or diverted proceeds from sales of assets.
Physical loss of assets through inadequate security or insurance coverage.
Continued ownership of obsolete or otherwise nonproductive assets.
Preparation of financial statements which do not accurately reflect existing assets.
|All fixed assets transactions are properly accumulated, classified and summarized in the general ledger accounts as appropriate.||A misstatement of reported financial position and results of operations.
Violations of loan covenants and/or rules and regulations of various grantor agencies.
Financial or operational decisions based upon erroneous information.