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Internal Control of Fixed Assets: A Controller and Auditor's by Alfred M. King

By Alfred M. King

What is the tremendous deal approximately fastened assets?If the PCAOB begins to check auditor paintings papers facing estate, Plant, and gear (PP&E) on a extra extensive foundation, will your company be prepared? What if reasonable price reporting for PP&E have been required?As well timed because it is whole, inner regulate of fastened resources peels again the layers surrounding the often-complex subject of inner controls for PP&E. This nuts-and-bolts booklet offers authoritative, step by step tips on constructing a procedure of inner controls for mounted resources, covering:IFRS as opposed to GAAP: what you need to knowInternal keep an eye on, Sarbanes-Oxley, and the PCAOBCapitalization and fee of PP&EDepreciation for books and taxesContingent resources and liabilitiesInternal auditing of PP&EWith up to the moment dialogue of IFRS and GAAP, this can be a must-have consultant for controllers, auditors, and CFOs, offering useful and confirmed recommendation on holding a functioning inner regulate method that may stand up to the nearest scrutiny from self reliant public accountants and, finally, the PCAOB. Get your latest procedure so as and remain some distance sooner than your opponents with the simple company research in inner keep an eye on of mounted resources.

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Extra info for Internal Control of Fixed Assets: A Controller and Auditor's Guide (Wiley Corporate F&A)

Sample text

This will be discussed in more detail in Chapter 3; here it only further supports our recommendation that capitalization levels be as high as possible for financial statements and internal control so as to minimize the physical inventory and concurrent reconciliations. Many company policies and controls date back before the availability of easy-to-use personal computer-based software. Without dating myself, the author saw manual records in many firms, the information kept on separate ledger cards, with depreciation being calculated manually.

There is a further argument in favor of this approach. A change from a $500 level to a $2,500 level, carried out over a four to five year period, essentially will reflect only the impact of offsetting the inflation that has actually occurred over the past 15, 20, or 25 years. Look at it this way, if $500 was correct 25 years ago then $2,500 today has the same financial impact in relation to prices paid for capex items. This is similar to LIFO (last in, first out) where higher and higher current costs go into cost of sales each year reducing the dollar amount of inventory on the books of accounts.

As a generalization, IT folk like efficiency, whereas the goal in fixed assets is to get maximum control with the least management time and effort. We suggest then that you contact probably three, but no more than four, vendors and ask them to visit you. This way the representative will obtain an understanding of what you are currently doing, will explain the capabilities of his particular suite of programs, and can then make recommendations. It is important that you ask for a specific proposal, focused on your company’s needs.

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