INTERNAL CONTROL: ASSET CYCLE

CONTROL OBJENTIVE OVER CASH RECEIPT AND PAYMENT CONTROL OBJECTIVES CONTROL ACTIVITIES All monies received are recorded Safeguards to prevent interception of mail between receipt and opening Appointment of responsible person to supervise mail Amounts received listed when post opened Post stamped with date of receipt Evidencing of receipt of cash -Serially numbered receipt forms -Cash registers incorporating sealed till rolls Clearance of cash offices and registers Cash received should be reconciled to till tolls Investigation of cash shortage and surplus All monies received are banked Receipts should be kept in locked safe and bank frequently Agreement of cash collection with banking and cash and sales records Investigation of cash shortage and surplus Bank reconciliation prepared regularly Cash and checks are safeguarded against loss and Protection of cash and checks theft Daily banking Make-up and comparison of paying-in-slips against initial receipt records and cash book No cash payment should be made out of cash receipt Limitation on cash float held Restriction on access to cash register Independent check on cash count Surprise cash counts All cash payments are authorized, made to the Checks requisitions correct recipient and recorded -Appropriate supporting document -Approval by appropriate staff -Presentation to check signatories -Cancellation Authority to sign checks -Signatories should not also approve checks -Limitation on authority -Number of signatories -prohibitions over signing blank checks Obtaining of paid checks from banks Prompt dispatch of signed checks Authorization of expenditure All expenditure should be supported by vouchers Limits on disbursements Payments recorded promptly in petty cash box Petty cash float should reconciled regularly Payments are not made twice for the same liability Supporting documents should be cancelled once paid Preparation of checks restricted Signatories should agree checks to supporting documentation

KEY CONTROLS OVER RECEIPTS Proper post-opening arrangement Prompt recording Prompt banking Reconciliation of records of cash received and banked

KEY CONTROLS OVER PAYMENT Restriction of access to cash and checks Procedures of preparation and authorization of payments

CONTROL OBJECTIVES Recording

CONTROL OBJECTIVE All inventory movements are authorized and recorded Inventory recorded only include items that belong to the entity Inventories recorded include inventory that exists and is held by the entity Inventory quantities have been recorded promptly Cut-off procedures are properly applied to inventory

CONTROL ACTIVITIES Segregation of duties; custody and recording of inventories Reception, checking and recording of goods inwards Inventory issues supported by appropriate documentation Maintenance of inventory records

Protection

Inventories are safeguarded against loss, pilferage or damage

Valuation of inventory

The costing system values inventory correctly Allowance is made for slow moving, obsolete or damaged inventory

Precautions against theft, misuse and deterioration Security over inventory held by third party, and third party inventory held by the entity Inventory counts -Regular inventory count -Fair coverage so that all inventory is counted at least once a year -Counts by independent persons -Recording -Cut-off for goods -Reconciliation of inventory count Computation of inventory valuation -(lower sale value or NRV) -Checking of calculations Review of condition of inventory -treatment of slow-moving, damaged and obsolete goods

Inventory-holding

Levels of inventory held are reasonable

-Authorization of write-off Accounting for scrap and waste Control of inventory level -Max. & Min inventory limit -Reorder level

NON-CURRENT ASSETS OBJECTIVES Security arrangements over non-current assets are sufficient NCA are properly accounted and recorded NCA are maintained properly NCA acquisitions are authorized NCA disposal are authorized The Proceeds of disposal are accounted for Depreciation rates are reasonable All income from the NCA is collected

INVENTORY CONTROL ACTIVITIES Segregation of duties, authorized, custody and recording Maintenance of accounting records SECURITY AND MAINTENANCE -Maintenance of property and plant REGISTER =Agreement with general ledger =Inspection of asset recorded -Inspection of NCA to ensure properly maintained and used ACQUISITION AND DISPOSAL -Authorization of capital expenditure -Authorization of sales, scrapping or transfer of NCA DEPRECIATION -Authorization of depreciation rates -Calculation and checking of depreciation rates INCOME FROM NCA -Identification of income producing assets -Adequate insurance cover Asset register