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Internal Control of System : Assignment

   

Added on  2020-05-11

8 Pages1856 Words100 Views
Finance
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1Internal control of the systemStudent’s nameProfessor’s nameInstitution nameDate of submission
Internal Control of System : Assignment_1

2IntroductionNon-current assets are goods which cannot be readily converted into unrestricted cash within a period one financial year (Deegan, 2013). These assets are further classified as tangible and intangible goods. Intangible assets are held in a balance sheet for a period exceeding one financial year, they are non-physical, e.g. copy rights, and patent. Tangible goods are physical and may include land, buildings, and equipment (Malmi, and Brown, 2008). The acquisition and disposal of these tangible non-current assets is a challenge to most companies, this requires the laying down of appropriate foundations, term and conditions for the acquisition and disposal. Every company places all its effects in these to ensure accountability and transparency in its management. B ltd Company has laid down the procedures for the acquisition and disposal of its tangible non-current assetsIn this paper will discuss the strengths of the internal control for the acquisition and disposal of tangible non-current assets as laid by B ltd and propose the procedure for testing the internal control of its system.
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3Strengths of internal control of the acquisition and disposal of tangible non-current assets of B Ltd.A purchase requisition form is completed and approved by the departmental manager for acquisition of new assets. This enables the department to be accountable on what is needed by the company for the efficiency of its operations. Some companies have their decision making, onwhat is needed and irrelevant in the company placed at the top of its management. B Ltd. Will not purchase any irrelevant tangible assets since it has full involvement of its employees, it is at the department level where the decision for the approval of the acquisition of any commodity is made. The acquisition is approved in the consideration of the needs of the company at the specific time. This helps in streamlining the process of new purchasing asset by the company.The purchase requisition form is checked by the purchasing officer for approval. Then, the Purchasing officer completes the purchase order. The purchase order indicates the agreed price, type and the quality of the commodity ordered. The consistency of information is maintained, theinformation contained in the purchase requisition form is approved. The quality of commodity and type needed is clarified that binds both the supplier and the company making the order. It helps for clarification of the information and correction of any errors that may have been unnoticed by the departmental manager when completing the assets requisition form.The financial accountant approves acquisition of new assets over $5000. The board of Directors approves purchase of new assets over $10000. This helps in monitoring huge expenditures by thecompany. B Ltd cannot spend large amounts of finances without the approval of the top management. It keeps the company away from the risk of overspending and running short of its finances due to large expenditures without approval from the board of directors. The board of
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