Fixed Asset Controls

Reasons for Fixed Asset Controls

The following are the important reason for establishing and maintain appropriate fixed asset controls


High Cost

Fixed assets are important because a huge fund are spend on acquiring theses assets. The many multinational balance sheet asset side is forming more than ninety percent of the asset.

Operations

The fixed assets are basically is the back bone of the company operations . because there are not only involved in the production process but also play its role in distribution of good and administration.


The following are important control over purchased of fixed asset

1. Commercial reason for purchase
2. Top Management approval for purchase
3. Detailed analyses of requirement and option available in market
4. Purchase order with detail specification 
5. The Fixed Asset Receipt report by the relevant Manager
6. The Fixed asset payment to vendor by crossed Cheques
7. The Fixed asset Coding
8. The entry of Fixed asset in Fixed asset Register
9. Assign the Fixed asset to appropriate person for safety and security

Control 

The fixed asset should be regular checked for his performance and existence . The process is called physical verification. The physical verification is performed on bases of fixed asset register and fixed asset figures appearing in the books of accounts.

The physical verification has basically two objective one is to verify the existence and to identify any theft on timely bases and other reason to dispose of the fixed asset in case of obsolete