Question

Explain the implication and provide a recommendation. To prepare this analysis, she asked you to use the following table structure: Weakness Implication Recommendation

Fixed asset cycle:

There is no formal asset requisition process.

Answer 1

Sl.no	Weakness	Implication	Recommendation
1	Non having of formal asset requisition process	Unauthorized transaction for purchase of asset	Formulate detailed delegation of authority for acquisition of assets
2	Non having of formal asset requisition process	Unauthorized transaction for purchase of asset	There should be division of responsibilities for acquisition of assets. Like User request, Purchase order, Goods receipt note, Capitalization.
3	Non having of formal asset requisition process	Incorrect depreciation	Maker and checker for depreciation entry in the books of accounts.
4	Non having of formal asset requisition process	Unauthorized transaction for sale of asset	There should be some formalities for sale of asset from user side. After user requisition there should be detailed procedure for sale of the asset