Internal Control Over Fixed Assets Accounting Essay

Internal Control Over Fixed Assets Accounting Essay Maintaining control over plant and equipment: subsidiary ledgers Unless internal controls over plant and equipment are carefully designed many units of equipment are likely to be broken, discarded or stolen without any entry being made in the accounting records for their disposal. The assets accounts will then be overstated and depreciation programs for such missing unites of equipment will presumably continue. Consequently net income will be misstated because of the omission of losses on retirement of plant assets and because of erroneous depreciation charges. One important control devise which guards against failure to record the retirement of assets is the use of controlling accounts and subsidiary ledgers for plant and equipment. The general ledger ordinarily contains a serpent assets account and related depreciation accounts for each major classification of plant assets, such as land, buildings ,office equipment and deal very equipment. For example the general ledger will contain the account office equipment and also the related accounts depreciation expense: office equipment and accumulated deportation: office equipment, the general ledger account, office equipment, contains entries for a variety of items: typewriters, filing cabinets , dicta phones, desks, etc It is not possible in this one general account to maintain adequate information concerning the cost of each item, its estimated useful life, book value, insured value, and other date which may be needed by management as a basis for decisions on such issues a replacement, insura nce and taxation. A subsidiary ledger should therefore be established for office equipment, and for each of the other general ledger accounts which represents many separate units of plant property. The subsidiary ledger in a manual accounting system may consist of a card life, with a separate card of each unit of property, such as a typewriter or desk. Each card shows the name of the asset, identification number, and such as details as date of acquisition, cost, useful life, depreciation, accumulated depreciation, insurance coverage, repair, and gain or loss on disposal. The general ledger account, Office Equipment, serves as a control; the balance of this controlling account is equal to the total cost of the items in the subsidiary ledger for office equipment, The general ledger account, Accumulated Depreciation: Office Equipment, is also a controlling account; its balance is equal to the total of the accumulated depreciation shown on all the cards in the office equipment ledger. Every acquisition of office equipment is entered in the controlling account and also on a card in the subsidiary ledger . Similarly , every disposal of an item of office equipment is entered in both be controlling account and the subsidiary ledger. Each card in a subsidiary ledger for plant and equipment shows an identification number which should also appear in the form of metal tag attached to the asset itself. Consequently, a physical inventory of plant and equipment can be taken and will prove whether all units of equipment shown by the records are actually on hand and being used in operations. Other advantages afforded by a plant and equipment ledger are the ready availability of information for the periodic computation of depreciation, and for entries to record the disposal of individual items of property. A better basis is also available for supporting the date in tax return, for obtaining proper insurance coverage , and for supporting claims for losses sustained on insured property. In well managed companies , it is standard practice to control expenditures for plant and equipment by preparing a budget of all planned acquisitions for at least a year in advance. A first essential to the preparation of such a budget is a detailed record showing the assets presently owned, their cost, age , and remaining useful life. Plant and equipment: Transactions that change the amount of investment in the plant and equipment of a business have a tendency to occur infrequently and to involve relatively large amount Current assets, on the other hand , are in more or less fluid state, undergoing smaller changes constantly. Although a companys methods of internal accounting control generally apply to all transactions, whether they relate to current assets or to plant and equipment . the auditing procedures differ for the two groups. In auditing current assets at the balance sheet date, the auditor is concerned with the balance on hand. changes that occurred during the year are not substantiated in detail except in audits designed as complete audits, With plant and equipment , the auditor is concerned with all changes that took place during the audit period regardless of the type of audit that is being performed ALL of any substantial amount that either increase or decrease the value of such assets must be examined. LAND: Land used in the operation of a business should be recorded separately from land acquired as an investment or speculation. Procedures in accounting for the two types of land differ considerably. Land held for business use appears on the balance sheet as a part of plant and equipment, and expenses associated with it are operating expense, whereas land acquired as an investment is classified with other investment assets, and applicable expense sometimes are capitalized, they are treated as non operating or financial expenses. Land acquired for use in the operation of a business should always be recorded separately from the building that may be located thereon. The principal reason for this is that the buildings are subject to depreciation, which must be treated as an operating cost, while it is not customary to take into consideration any depreciation on land in ascertaining the operating costs of a business. In cases where an auditor finds land and building recorded in a single real estate account , he should recommend a segregation of the land and buildings with a specific value on each. This will facilitate the computation of depreciation of building apart from the land. Land is, in a sense, the most permanent asset of a business, the auditor should ascertain that the land account is charged with(1) the original cost,(2) the expenses incident to the purchase, such as a cost of investigating the title, recording the deed, commissions paid, and any other expenses that represent an addition to the purchase price and(3) the cost of subsequent improvements that increase the value of the land, such as draining, grading, building approaches, assessments for sewers, and treat improvements. Not infrequently. Assessments for improvements charged off as current operating expenses. Such costs, however, should be charged to the land account. When land is sold. The land account should be credited with the cost price, while the difference between the cost and the selling price should be recorded separately as a loss or a gain. Under this procedure the balance of the land account will always represent the original cost plus the cost of improvements of the land owned. Vehicles: Every organization that has vehicles must have a vehicle politics. This will write down the policy on a range of cases such as: Insurance Depreciation Repair and Maintenance Purchasing, disposal and replacement Private usage of it by staff What needs to be done when an accident happen Driver training and qualifications Carrying the passengers The costs of replacement and repair must be good in the budget procedure. For every vehicle there must be a record of journeys so that the operation costs per Km can be evaluated and private use closely monitored. Buying fuel for cash is risky, and it might be safer to establish an account with a reputable fuel company and pay every month by check instead Buildings: Buildings may be acquired through the purchase of real estate in which case separate values should be placed upon the buildings and land, the basis of the valuation being cost. In the preparation of annual should be valued at cost plus addition and Improvements less the depreciation. For balance sheet purposes, the buildings are generally listed at cost with the allowance for depreciation being deducted. The difference is extended as the book value of the buildings. Occasionally they question arises whether the accounts for buildings, as will as land and other types of plant and equipment should be marked up from the basis of cost to a higher current value determined by an appraisal. In the audit of the buildings account the auditor should prepare working papers in which different buildings are segregated. These working papers should show the book values at the beginning of the period under audit the cost of additions or deductions during the period. These beginning and ending balance should be checked with the amount of the building and ending balance on the balance sheet as both dates and should be in agreement with the account on the books. If the subsidiary building ledger is maintained it should be compared with the controlling account in the general ledger to see that they agree . all additions and deductions during the period should be carefully examined to be sure that they have been properly accounted for, due care being used to disting uish between capital and revenue expenditure. AUDIT OBJECTIVES Audit procedures to be followed when examining plant and equipment records are designed to acquaint the auditor with the recording methods used. To assure him that the claim of ownership is valid, and to assist him in determining that the assets do in fact exist and that the provisions for depreciation are adequate but not excessive. they also help in determining that internal accounting control is adequate that property accounts show consistent treatment of properly capitalizable items, hat no significant additions to properties have been charged to income, and that proper retirements and replacements. Elements of Internal Control over fixed assets Fixed Assets are sometimes referred to as Property, Plant and Equipment (PPE) and the terms are used interchangeably. In many companies the following elements of Internal Control over PPE are considered and performed according to standard guidelines: Approval process for Capital Expenditures (Capex) Determination whether planned expenditure is capitalized or expensed Purchasing and Accounts Payable systems are correctly applied If capitalized, appropriate useful life and salvage value determined Correct depreciation expense is calculated and applied each period Property tax reports filed with tax jurisdictions Insurance coverage relates directly to asset exposure However, there is one critical element of Internal Control that often is missed. This involves periodically checking that the information shown in the property record system corresponds to the actual assets reported to be there. To put this into perspective, a company may have a very good system of invoicing and accounts receivable, but it is still necessary to confirm that outstanding balances as part of the required annual audit. One well known aspect of this is the verification of ageing debts in the A/R ledger to confirm their collect ability. Similarly, with inventory (raw material, work in process and finished goods), for the past 70 years companies have been required to perform a physical count and valuation at least once a year. Further, auditors are required to monitor closely the inventory taking and pricing. In the case of perpetual inventory systems, periodic sample testing is required, again with external auditor input. After the reconciliation of receivables and inventory, adjusting entries must be made to bring the accounting records into agreement with the underlying assets. It is equally necessary that the same kind of reconciliation of reported balances to actual physical assets is in place because for many companies, PPE may represent 35% or more of total assets. Without a periodic reconciliation, the property record system will lose accuracy as items are scrapped or enhanced. If a reconciliation is performed and adjusting entries made, however, the resultant asset category totals have been verified. Managem ent can then sign with confidence the Section 404 certification its assertion that there is a system of Internal Controls and that the system is working properly. The Assets Register An Assets registry should be established with a record sheet or an entry for each asset. Each asset must be given a unique ref number for identification goals. The register will include information about when and where the item was purchased; how much its insured for; how much it cost; repair history; ref number, serial numbers and details of guarantees and warranties. It may also contain information on depreciation, if it is pertinent. The entry should state where the item held and who is responsible for its security and maintenance. The Assets Register must be checked by a committee member and senior manager each quarter or any discrepancies reported and take the appropriate action. Internal Control of Fixed Assets: A Controller and Auditors Guide: What are standard fixed asset control procedures? Tagging & labeling of assets assets are labeled or tagged so that they can be easily identified & their ownership established I insurance of assets against theft, fire, flood etc.- in most countries, only vehicles are insured. But it is a recommended practice to insure all project assets. In some financing agreements, this is mandatory Physical inventory of assets at regular intervals Log books for vehicles , construction equipment, generators etc. The log book records the details of use of the asset & is usually maintained by the driver or operator. It helps in identifying personal use of project assets. It is also used for calculating fuel consumption Cross referencing of financial & fixed asset records done to avoid payment to supplier before assets are recorded in the FAR. For internal control purposes it is vital to reconcile the financial accounting records with fixed asset records Note: In some countries, it is the Government Policy to only insure vehicles. Auditingà ¢Ã¢â€š ¬Ã‚ ¦ second editionà ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦..silvoso. bauer**** ****Accounting the basis for business decisionsà ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦.fifth editionà ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦ walter B. meigs and Robert F. meigs.

Being Bilingual: Important Skill in a Globalized World Essay

Have you ever thought of learning a new language, and ever wondered what advantages this would give you? Maybe you have never asked these types of questions before, since you didn’t need to speak another language than your native. Today, being bilingual has become popular, but this is a necessity. In this globalizing world, speaking more than one language makes people more productive. Researchers say that there are advantages to being bilingual. These advantages can be reflected in your work, health, and social life. One advantage of being bilingual is reflected at work. Now, the unemployment rate is really high, so it is a good idea to increase skills by learning a new language. It is known that being bilingual increase job opportunities. For example, more of the United States’ population speaks English and Spanish. This causes an important change in the way companies hire their employees; consequently, one of the requirements is being bilingual. This requirement is important to companies because communication with people that surround the market open the possibility of new customers which means profits rise. At the same time, salary also increases when the employee has the ability to communicate in different language other than English. This is a good reason to be bilingual. Another advantage is seen in your health. Research has shown that being bilingual improves brain health. A person who speaks two languages makes the brain work harder than a person who only speaks one language. This ability raises cognitive skills not related to language and even resists Alzheimer’s disease. As an example, speaking two languages is like exercising the brain and making it strong. In other words, a bilingual person has a working and healthy brain. Finally, a bilingual person is benefited in his social life because he has the opportunity to communicate with people in a different way. Currently, we are able to travel around the world. For example, a tourist visits Mexico where people speak Spanish. If the tourist is bilingual, he will have an easy and pleasant trip and will enjoy and understand that culture. For this reason, it is important the communication even when is not in native language. Communication is the key to understand and enjoy the culture diversity which is necessary for a pleasant social life. In conclusion, being bilingual is a skill that can be consider as necessary because this benefits you in your work, health, and your social life. The world is becoming more and more integrated, so having a second language is going to become more common. If you learn a new language, you will help your brain to be healthy, while you have better opportunities in your professional life.

House of Spirits – Epigraph by Pablo Neruda

How does the epigraph relate to the greater message in the novel? An epigraph is a quotation, phrase or motto at the beginning of a piece of literary work, thus setting forth a theme for the piece of literature. In this case, this epigraph gives the readers a small gist and theme of what to expect when they read the novel. â€Å"The House of Spirits† is a novel which was written by Isabel Allende. This story revolves around family life, mainly around two upper-class families; the Del Valle and the Trueba family and was originally written in Spanish, then translated to many different languages, English being one. The story is set in a Latin-American country. The epigraph by Pablo Neruda has a much deeper meaning which the reader has to implore. In a nut-shell, the epigraph talks about two things; life and death. Pablo Neruda is Chilean by nationality, which may also suggest that this ‘Latin country’ we thing the novel is set in, may very well be Chile. The first line asks a question which when thought about, not many people have an answer to. Together with the second line, we can reflect to the novel because even though we may exaggerate and say we live a thousand years, the crucial events that define an individual’s life take place in the matter of just a few days and at the end of the day it is those events that decide the fate of a person’s life. We can connect this to the novel by using the example of Esteban Trueba and Clara, when after he hits her, she decides not to speak to him, nor to use her maiden name and never to wear their wedding ring ever again. It was that one moment that sealed their fate, and their real personality was reflected. â€Å"For a week, or for several centuries? †- this line makes us think, how one small contribution to the world can change a person’s life. He will be remembered for years and years to come, just for that one small thing he may have contributed to the world, in a matter of minutes. The fourth line makes us reflect back on life. All along, as individuals we have thought of death just ‘happening’ and getting over. Like an event. But this novel makes us thing otherwise. It portrays itself as a long process. Dona Ester is a very good example from the novel regarding this. Her life is already declining and there is nothing that she can do to change that fact. It is like she has already begun to die, a slow process, she is just counting her days till that ‘moment’. We can also look at death in another way. In a certain situation, death may also mean not physically leaving the world or your mortal body, but killing something, leaving something behind. We can use the example of Esteban Trueba and Clara, as when he hits her and she decides not to converse with him anymore, it is the beginning of the ‘death’ of their relationship. Another comment on the epigraph I would like to make is that everywhere, Pablo Neruda has used â€Å"he† and â€Å"man†, suggesting that at the time he wrote it, the society he was living in was a male-dominated society. This is also reflected in the book as the inequality to women is clearly shown all through. Ironically, this poem has 5 lines and also there are 5 generations in one of the most important families in the book; the Del Valle family: grandmother, Nivea, Rosa, Clara, Blanca and Alba. This epigraph gives us a surface picture of what to expect in this novel, but as we have seen, if we go deeper to explore, there can be so many more meanings to it.

Congugation of Jeter in French

Jeter  is one of two verbs that means to throw in French, and conjugation of this common verb can be tricky for students to learn. But this stem-changing verb, like lancer (which means the same thing), is a very useful one to know. Youll use this verb to talk about sports and to describe everyday activities. Present, Future, Imperfect The first step in any French verb conjugation is to identify the stem and in this case, it is  jet -. Thats very important here because  jeter  is a  stem-changing verb. In the conjugations, you will notice that some forms use a double T while others retain the single letter from the infinitive form. Subject Present Future Imperfect je jette jetterai jetais tu jettes jetteras jetais il jette jettera jetait nous jetons jetterons jetions vous jetez jetterez jetiez ils jettent jetteront jetaient A series of infinitive endings are added to the stem to match  the subject pronoun  with the proper tense. For instance: je  jette   I throw  nous  jetterons.  Ã‚  We will throw   Present and Past Participles The  present participle  of  jeter  is formed with an -ant  ending to create  jetant. Its also an adjective, noun, or gerund in certain circumstances. Forming the past tense  passà © composà ©Ã‚  is simple. Conjugate the  auxiliary verb  avoir, then attach the  past participle  jetà ©. Examples: jai jetà ©   I threwnous avons jetà ©.   We threw Subjunctive, Conditional, and Other Conjugations As you become more proficient in French, you may also need to know some of these tenses.  The subjunctive verb mood implies that theres a question to the verbs action. The conditional does not guarantee it either because the action is dependent on conditions. Youll probably only find the passà © composà © and the imperfect subjunctive when reading French. Subject Subjunctive Conditional Pass Simple Imperfect Subjunctive je jette jetterais jetai jetasse tu jettes jetterais jetas jetasses il jette jetterait jeta jett nous jetions jetterions jetmes jetassions vous jetiez jetteriez jettes jetassiez ils jettent jetteraient jetrent jetassent In the imperative verb form, skip the subject pronoun because its implied in the verb. For these short exclamations, use jette instead of tu jette. Imperative (tu) jette (nous) jetons (vous) jetez ​​