11/28/2019 7 Things every Auditor has to Know about Fixed Assets

Fixed asset and inventory

7 Things every Auditor has to Know about Fixed Assets

9 reading min.

written by
Dennis Jürgensen

Tweet Share Like 6 Share

https://www.zapliance.com/en/blog/auditing-fixed-assets-in-sap 1/10
11/28/2019 7 Things every Auditor has to Know about Fixed Assets

Between the acquisition of an asset and its retirement, there can be many stumbling
blocks along the way. By using data analysis in SAP, an auditor can find out a great
deal. That is the reason why I would like to introduce you to the basics of a fixed
asset audit and the challenges that may be involved.

We will be focusing on the 7 areas:

1. Preparation
2. The necessary data structure
3. Asset acquisition
4. Asset master data
5. Depreciation
6. Manipulated asset retirement
7. Segregation of duties

 If you don't want to waste time auditing fixed asset and inventory in SAP,
take a look at zap audit's data indicators.

Preparation
Before embarking on a process audit of fixed assets in SAP involving extensive data
analyses, even for the purposes of a digital audit, our examination should still be
based on a knowledge of the actual processes related to assets. In our
methodology, the SAP processes for fixed assets implemented in the SAP system
must first be determined empirically in the SAP database. Only then can data
analyses be carried out on the basis of known processes for fixed assets. The
determination and reconstruction of all processes is carried out by the Financial
Process Mining Algorithm we have developed.

How do xed asset processes differ from other processes in SAP?

As a rule, processes in the area of fixed assets are shorter than purchasing or sales
processes. In the field of asset acquisition, there is an overlap with the normal
purchasing process. The other processes, e.g. the posting of depreciation and the
https://www.zapliance.com/en/blog/auditing-fixed-assets-in-sap 2/10
11/28/2019 7 Things every Auditor has to Know about Fixed Assets

asset retirement are time- or event-related and involve only one or a few process
steps. There may be corresponding overlaps with the sales process in the case of
asset retirement. The Financial Process Mining Algorithm also takes account of
procedures in the area of fixed assets, so that all individual processes in this area
are known by applying the algorithm.

How does the data analysis work?

Once all processes have been reconstructed by the Financial Process Mining
Algorithm, the data analyses are carried out in the form of various data indicators.
An indicator always represents a question relevant to the audit. A document may or
may not be affected by an indicator. An indicator thus gives a "black-and-white
picture" of the situation and divides all documents into a set of documents affected
by the indicator and into a set of unaffected documents.

The necessary data structure

SAP stores all data, e.g. by means of a transaction, the date, affected asset, etc. in
different tables. If the transaction was executed, this leads to a document being
generated in SAP which can only be deleted at considerable cost, if at all. In this
context, the restrictions on the erasure of electronic data according to §239 of the
German Commercial Code (Handelsgesetzbuch – HGB), which we will not go into
further at this point, are also of key importance. Instead, reversal entries must be
made to correct any errors that may have occurred. The reversal entries also
generate a document in SAP and refer to the object to be reversed. This results in a
sequence of actions that can be reconstructed using the Financial Process Mining
Algorithm already mentioned above. The most important SAP tables for auditing
SAP fixed assets and inventory for the auditor are:

ANKA: Asset Classes (General Data)

ANKT: Asset Classes (Description)
ANLH: Main Asset Number
ANLA: Asset Master Record Segment
https://www.zapliance.com/en/blog/auditing-fixed-assets-in-sap 3/10
11/28/2019 7 Things every Auditor has to Know about Fixed Assets

ANLB: Depreciation Terms

ANLC: Asset Value Fields
ANLP: Asset Periodic Values
MARA: General Material Data
MBEW: Material Valuation
MKPF: Header Material Document
MSEG: Document Segment Material

Certain documents in accounting also refer to documents in fixed assets. Most of

the time, they relate to business transactions involving fixed assets, like asset
acquisition, or asset retirement. While on the subject of accounting tables in SAP,
we should also mention the SAP table BSEG which references the data field ANLN1
(Asset Number) and ANLN2 (Asset Subnumber).

Data extraction
Data extraction can be hard when it comes to SAP. There are several tools which do
exist on the market, but often an ABAP program is needed in the SAP system. This
can however be the first “showstopper”, because transactions into a SAP system
often require a Change Management Process. This can take a long time, due to the
various authorization steps involved.

But there is also a way to extract data manually using an SAP dialog. You can for
instance use the SAP transaction SE16. Unfortunately, though, this does involve a
lot of manual work and can be very a cumbersome process.

By using Remote Function Call (RFC), there is another way of extracting data from
your SAP system. You only need a SAP user with corresponding user access rights
to call the Remote Function Call component. One of the big advantages of this is
that you do not need to install any ABAP programs in your SAP system. Compared
to other techniques, RFC is pretty old and can sometimes be slow, though it is well-
established and available in all SAP systems. RFC can thus be a convenient and
effective way of optimizing data extraction and can be used to extract data for
analysis from the SAP system with relative ease.

https://www.zapliance.com/en/blog/auditing-fixed-assets-in-sap 4/10
11/28/2019 7 Things every Auditor has to Know about Fixed Assets

If you have already managed to extract the relevant data from your SAP system and
set up the data structure, then you are ready to go. You now have the foundations
you need to perform further analyses. At this point, there is another key question
you have to ask yourself: What exactly do I want to know from the data I have
extracted? In what follows, we will provide some examples by way of illustration. If
you have already defined some questions that you want to ask, you then have to
think about what data fields and combinations of data fields are necessary for you
to do your analysis. In the area of fixed assets and inventory, we have developed 22
indicators / audit questions to analyze critical data fields and identify the
corresponding documents. Every indicator is therefore related to a process, a
process area, and an audit objective, and thus covers a certain risk. As I have
already mentioned, I am going to introduce you to some of the indicators in more
detail in what follows. The focus will be on the process areas of asset master data,
asset acquisition, asset depreciation, asset retirement and segregation of duties. If
you are interested at this point and want to know more, you can download all of our
22 indicators in the area of fixed assets and inventory here:

Download pdf

Asset acquisition
Examples for indicators relating to asset acquisition are: Fixed asset acquisition
without an invoice, rare fixed asset transactions or the temporary deactivation of
fixed assets. Let’s take a closer look at the fixed asset acquisition without an invoice
indicator.

As already mentioned, every indicator is associated with an audit objective. Because

of a lack of correctness, this indicator is dedicated to the compliance and
correctness audit objective. The corresponding risk should be clear to every auditor
– a posting has been made without an invoice. Thus, transparency has been

https://www.zapliance.com/en/blog/auditing-fixed-assets-in-sap 5/10
11/28/2019 7 Things every Auditor has to Know about Fixed Assets

affected at the very least and you should take a closer look at the related bank
accounts. You may be dealing with a typical case of fraud. The criteria for a
document getting marked is once again pretty straightforward: A document will be
marked because it contains an asset acquisition (BSEG-ANBWA=100) but an
incoming invoice is missing (credit position related to a vendor BSEG-KOART=K).
Assets under construction are not included in the analysis.

Asset master data

After purchasing an asset, a master record is maintained for every asset in SAP.
Unfortunately, incorrectly entered or missing data may occur as a result of human
interaction with the ERP system. For this reason, we have implemented indicators
for implausible fixed asset depreciation start dates, missing fixed asset master
records, incomplete fixed asset master data and much more. If we take a closer look
at the missing fixed asset master record indicator, we will see that more than one
SAP table is used to save information on master data. This indicator, for example,
checks for the absence of an asset in the SAP tables ANLH ( main asset number),
ANLA (asset master record segment) and ANLB (depreciation terms). If a reference
is missing from these SAP tables, the corresponding document will be marked and
shown in the user interface of zap Audit.

Depreciation
Related to asset acquisition, the data analysis for asset depreciation works in pretty
much the same way. Examples of relevant audit questions in this area are: is there
fixed asset depreciation of more than 50% of activation value, or fixed asset
appreciation or a fixed asset with a negative book value? Here, we will take a closer
look at the issue of a fixed asset with a negative book value: this is related to the
audit objective of compliance and correctness. You may however want to ask
yourself the question how this phenomenon has occurred in the first place. If the
reason for a negative book value becomes clear, then the related risk should be
obvious. In our audit methodology, a document will be marked if the cumulative
https://www.zapliance.com/en/blog/auditing-fixed-assets-in-sap 6/10
11/28/2019 7 Things every Auditor has to Know about Fixed Assets

depreciation ( prior years + current year) exceeds the cumulative costs of acquisition.
In this way, the risk of incorrectly calculated depreciations can be clearly shown.

Manipulated asset retirement

Normally, you would think that there is not much risk associated with the possibility
of asset retirement, right? If so, then I am afraid I have to disappoint you. It is
precisely in this very area that there can be a great deal of potential for financial
losses which may go unnoticed. Three examples for audit questions that we have
already implemented are: Fixed asset procured and retired within one year, fixed
asset retirement with only small profit, or P&L loss at retirement or sale of asset.
The weaknesses addressed can already be identified from the names of the
indicators. There is a high potential for fraudulent conduct which can affect P&L.
Fixed asset retirement with only small profit is pretty self-explanatory: this indicator
is related to the audit objective of opportunities for savings and addresses the risk
that fixed assets were sold for a price below their actual value. In what cases, will a
document be marked? The answer is simple: when the profit is less than 5% of the
acquisition costs.

Segregation of duties
We have written about this topic on several occasions already. However, it is also of
relevance for fixed assets. We explained our approach in this area in greater detail
in one of our recent blog posts on the topic of identifying conflicts of segregation of
duties thanks to our Financial Process Mining algorithm. Even in the area of fixed
assets, one is never safe from the risk of conflicts of SoD. Once again, we should
also underline here that our methodology does not just check what is theoretically
possible, but what has actually happened.

The following are examples of specific conflicts of SoD in the field of fixed assets
that can be detected using our methodology:

https://www.zapliance.com/en/blog/auditing-fixed-assets-in-sap 7/10
11/28/2019 7 Things every Auditor has to Know about Fixed Assets

Pay a vendor invoice and hide it via asset depreciation

Create an invoice via ERS GR & hide it via asset depreciation
Maintain an asset and capitalize or add costs to master record
Maintain an asset and manipulate the receipt of the asset
Remove material by adjusting out via WM physical invoice
Maintain service or material master data & add items to purchase agreements

Topics: Master Data, digitization, Segregation Of Duties, Depreciation, xed asset, xed
asset retirement, SAP Audit, Acquisition

Sign up to receive
our latest news and special offers
direct to your inbox!

 Your business email

I agree to the terms and conditions of the Privacy Policy.*

subscribe now

 Our recommendations to you

https://www.zapliance.com/en/blog/auditing-fixed-assets-in-sap 8/10
11/28/2019 7 Things every Auditor has to Know about Fixed Assets

Way to go: Auditing real SoD in order-to-cash

SAP data structure in order-to-cash: Who cares?

Two steps to analyze bad payment terms in SAP

The Ultimate Guide to Auditing Order-to-cash in SAP

Tracing flows of cash in SAP: Where did your money go?

Comments

Name*

Email*

Comment*

I agree to the terms and conditions of the Privacy Policy.*

protected by reCAPTCHA
Privacy - Terms

submit

© zapliance GmbH 2019

Legal Notice

https://www.zapliance.com/en/blog/auditing-fixed-assets-in-sap 9/10
11/28/2019 7 Things every Auditor has to Know about Fixed Assets

Privacy Policy

GT&C

https://www.zapliance.com/en/blog/auditing-fixed-assets-in-sap 10/10