NON – CURRENT ASSETS
•Non current assets include:-
plant and equipment,
office furniture & fittings, computers,
land & buildings and
motor vehicles.
• These assets are normally extremely valuable, both in
dollar terms and their contribution to most business
organisations.
• Although non-current assets to many organisations
are large and difficult to remove, others are not, and
therefore it is important that strict control be maintained
over the entire range.
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CONTROL OBJECTIVES FOR NON-CURRENT ASSETS
ENSURE THAT:
• Acquisitions are properly approved and authorised
• All assets are properly recorded in the accounting records
• Depreciation, amortisation and other related expenses are
properly calculated and charged to the correct accounts
• The appropriate approval and authority is received before
the asset can be disposed of
• There is sufficient segregation of duties between the
acquisition, disposal and recording functions
• Management constantly reviews the organisation’s position
as regards non-current assets
• Revaluations and devaluations are correctly recorded
• Repairs & maintenance (including insurance) are correctly2
carried out and recorded.
CATEGORIES WHICH REQUIRE SEGREGATION OF
DUTIES AND MAJOR CONTROLS
• Controls over acquisition and recording
• Controls over use, security and maintenance
• Maintenance of asset register
• Controls over sale or disposal
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ACQUISITION AND RECORDING
• Non-current assets should be acquired only on the basis of an
organisations overall strategic plan and budget constraints
• Different levels of management approval are required depending
on the assets value (major acquisitions would normally require
the approval of the board of directors or management committee
• A specially designed non-current assets requisition order is used
for all non-current asset purchases
• Controls should be maintained over construction and installation
costs
• All acquisitions should be promptly and accurately recorded in
the general ledger and the non-current assets register
• Title deeds, loan and security documents should be stored in a
secure location
• The methods for calculating and recording depreciation and
amortisation charges should be constantly applied from one
accounting period to the next 4
USE, SECURITY AND MAINTENANCE
OF NON CURRENT ASSETS
• Assets should only be used for legitimate purposes
• Asset should not be used for an employees private benefit.
(Unless the appropriate authorisation has been received)
• Asset should be protected from misuse, accidental loss or
theft. The existence of physical security controls such as
guards, alarms, surveillance cameras, and permanent
identification labels help protect non-current assets
• Assets should have adequate and up-to-date insurance
• Asset should be regularly reconciled with the assets
register
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CONTROLS OVER SALE OR DISPOSAL OF
NON CURRENT ASSETS
• The responsibility for disposal should be reserved for a
senior official who is independent of the acquisitions,
recording and custody functions
• Disposals or transfers should occur only on the written
approval of a senior official
• The disposal should be reflected accurately in the
financial statements as either a profit or loss on disposal
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