Understandtheacccountingsystem

FIXEDASSETS
System Narrative

Asset capitalization/repair and maintenance procedures:

Depreciation methods and lives:

Straight line depreciation based on the following useful lives:
Building: 20 years
Machine & equipment: 10 years
Motor vehicle 5,5 years
Others: 5 years

Comments on inherent risk factors:

None

Cutoff procedures:
For purchase: At the end month, compared the list assets with vochers and the leger by Mr Dung
For depreciation: At the end month, Depreciation is calculated, and checked by Mr Dung
For assets fully depreciated or idle assets: At the end month, list assets will printed, For assets
fully depreciated or idle assets stop to immediately calculate depreciation and checked by Mr
Dung

System personnel and duties

Departments use assets

Aministrative and personnel department
Mr Dung - Accounting Department
Significant accounting procedures, including information systems processing, are:

Depreciation method: Straight -line basis.

Fixed asset purchase: With fixed assets is not the main machinery and equipment for production,
when a department have the demand, they prepare list to submit to administrative department
(Walkthough 1).
The administrative department will review and post to board of manager(Walkthough 2).

AASC
 GUIDE FOR SMALLER BUSINESSES

D. System Narrative and Risk Assessment:

______________________________________(CONTINUED)
When board of maneger aggree to buy those fixed asset, the administrative department implement
to buy, transfer to using department (Walkthough 3,4).
After all document is posted to acounting department , acounting department recorded in
accounting books (Walkthough 5).
Fixed asset disposal: similar to procedure of purchase fixed asset.
Classification of assets: Fixed asset is classificated according to using department or place of fixed
asset is used.
Supervisory review, control consideration, and owner or manager involvement:

Approval for fixed assets purchase/ disposal:

With fixed assets is machinery and equipment for production: Board of Management
With other fixed assets: Board of Director
Approval for depreciation rates: According to Vietnamese regulations (CircularNo 166 issued by
Ministry of Financial)
Physical control of assets: Using department.

eAASC
Date:

Prepared by:

SB-13 (12-00) Understand the Accounting System – Payroll Reviewed by: