Description
Tangible assets of an organization or a company can be broadly divided into two categories: inventory items and fixed asset items.
Best Practice Checklist
?????
Corruption Prevention Department
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Tangible assets of an organization or a company can be broadly divided into
two categories: inventory items and fixed asset items. For the purpose of
this Best Practice Checklist, inventory items include saleable goods or raw
materials used for production by the organization or company. Fixed asset
items include those made available for use by the staff when conducting the
business of the organization or company, such as computers, office
equipment, and company cars, etc.
Past corruption cases showed that stores management is an area prone to
corruption. Staff having access or control over stores may be tempted to
misappropriate or misuse them for personal gain. There were also cases of
collusion between the suppliers and the stores staff, who condone acceptance
of inferior goods or short delivery, resulting in financial loss to the employer.
This Best Practice Checklist aims at providing organizations with a
user-friendly and step-by-step guide on stores management with
recommendations of safeguards to minimize risks of corruption or
malpractice. Organizations are expected to adapt the recommended
safeguards to suit their organizational structure, resources, risk exposures,
and any statutory requirements.
The Advisory Services Group of the Corruption Prevention
Department of the Independent Commission Against Corruption
provides free, confidential, and tailor-made corruption prevention
service to private companies on request. The Group also stands
ready to tender further advice to on how to apply the recommended
practices in this Best Practice Checklist to suit individual needs.
For more information, please contact the Group at :
Telephone no. : 2526 6363
Fax no. : 2522 0505
Email address : [email protected]
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IN NT TR RO OD DU UC CT TI IO ON N
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Pages
CHAPTER 1 INVENTORY ITEMS – KEY PROCESSES
1
CHAPTER 2 INVENTORY ITEMS –
CHECKLIST OF RECOMMENDED PRACTICES
2.1 Setting up an Inventory Management System 2
2.2 Security of Stores Facilities 3
2.3 Receipt of Inventory Items 4
2.4 Issue of Inventory Items 5
2.5 Disposal of Inventory Items 6
2.6 Inventory Check 7
CHAPTER 3 FIXED ASSET ITEMS – KEY PROCESSES 9
CHAPTER 4 FIXED ASSET ITEMS –
CHECKLIST OF RECOMMENDED PRACTICES
4.1 Setting up a Fixed Asset Management System 10
4.2 Receipt, Storage, Issue, and Disposal of Items 1 1
4.3 Inspection and Monitoring 12
1
CHAPTER
Listed below are the key processes in the management of inventory items. The
recommended control measures for each process are provided in Chapter 2 (the
relevant paragraphs are quoted below).
Setting up an Inventory Management
System and Security of Stores Facilities
(2.1 & 2.2)
Receipt of Inventory Items (2.3)
Issue of Inventory Items (2.4)
Disposal of Inventory items (2.5)
Inventory Check (2.6)
I
IN NV VE EN NT TO OR RY Y I
IT TE EM MS S –
– K
KE EY Y P
PR RO OC CE ES SS SE ES S
Key Processes
2
CHAPTER
Responsible
Parties
Recommended Control Measures
Management Lay down in guidelines the policies and procedures for inventory
management, including:
receipt, secure storage, replenishment, and disposal of inventory items;
conduct of inventory checks, handling of discrepancies, amendment of
inventory records, and handing over of stores, etc.
Clearly specify:
the authorities for inventory management activities (e.g. issue of stock,
disposal of inventory items, writing off and amendment of inventory
records); and
the roles and duties of the staff responsible for various inventory
management activities (e.g. storekeeper, store supervisor, procurement
and accounting staff).
Store
Managerial
Staff
Put in place a computerised inventory management system, if resources
allow, to maintain accurate inventory records and to facilitate control and
supervision, such as:
search keys for identifying an item or a batch of items, including the
item code and batch number, and data such as description of the item
and its location in the store;
stock movement transactions, including dates, quantities of incoming
or outgoing items, voucher references, the names of issuing or
receiving staff, etc.; and
stock information such as the expiry or validity date, and stock balance
of items in store.
Install a bar-coding system or radio frequency identifier technology to
further enhance control of inventory items, if resources permit.
I
IN NV VE EN NT TO OR RY Y I
IT TE EM MS S –
– C
CH HE EC CK KL LI IS ST T O OF F
R
RE EC CO OM MM ME EN ND DE ED D P
PR RA AC CT TI IC CE ES S
2.1 Setting up an Inventory Management System
INVENTORY ITEMS – CHECKLIST OF RECOMMENDED PRACTICES CHAPTER 2
3
Store
Supervisor
Segregate the following duties as far as practicable:
purchasing duties from inventory control duties;
storekeeping duties (duties involving physical access to inventory)
from inventory record-keeping duties;
storekeeping duties from inventory disposal approving duties.
Accounting
Staff
Maintain independent accounting records on inventory.
2.2
Responsible
Parties
Recommended Control Measures
Store
Managerial
Staff / Store
Supervisor
Ensure there is adequate physical security to safeguard items in stock,
having regard to their value. For example:
keep inventory in an adequately secure store room equipped with
electronic access control or a lock with the key kept by only the
storekeeper (the duplicate key should be kept in the accounts or
administrative section in a sealed envelope signed by two persons to
prevent unauthorized use);
if an electronic system is used, ensure access is controlled by
personalized security passes so that the identity of the staff accessing
the store is logged for future checking if necessary;
if necessary, install a CCTV system with recording function to monitor
movements at the store entrance and inside the store; and
if cupboards or cabinets are used for storage, ensure the keys are under
the control of a designated staff member to enhance accountability and
the duplicate keys are secured in the same way as for the store room.
2.2 Security of Stores Facilities
INVENTORY ITEMS – CHECKLIST OF RECOMMENDED PRACTICES CHAPTER 2
4
Lay down in guidelines the store security procedures as necessary. For
example:
restrict access to the storeroom to designated staff members only;
give personal access codes or passes to the staff strictly on a need basis
and instruct them to safeguard their own codes/passes;
record the names of persons given permission to enter the store room
on an ad hoc basis and the reasons;
change the access codes whenever there are staff changes;
require the store room to be locked at all times except when in use or
under guard; and
make spot checks to ensure compliance as appropriate.
2.3
Responsible
Parties
Recommended Control Measures
Procurement
Staff
Copy purchase orders to the storekeeper for him to keep in view delivery
to the warehouse.
Witness the receiving process and counter-sign the receipt in case of goods
ordered in large quantity or of high-value.
Storekeeper Inspect the goods received against the specification and quantity shown in
the purchase orders and certify receipt on the invoices or delivery notes if
in order.
Report any goods in excess, short delivery or defective goods to the
procurement unit or user as soon as possible.
Update the inventory movement records according to the certified receipts,
with copies sent to the accounting section.
2.3 Receipt of Inventory Items
INVENTORY ITEMS – CHECKLIST OF RECOMMENDED PRACTICES CHAPTER 2
5
Accounting
Staff
Update the master inventory accounting records according to the certified
receipts.
2.4
Responsible
Parties
Recommended Control Measures
Store
Supervisor
Design a standard form for requests for issue of inventory items.
User Raise requests for issue of inventory items using the standard request
form.
Supervisor Ensure that requests for issue are justified (e.g. supported by production
job orders) before endorsement as appropriate.
Storekeeper Verify the issue request before issuing the items and require the receiving
staff to acknowledge receipt on the form with a copy sent to the accounts
section.
Issue stocks on a “first-in first-out” basis, particularly for items with an
expiry date or a limited shelf life.
Update the inventory movement records without delay.
Accounting
Staff
Update the accounting records according to the request forms duly signed
by parties concerned.
2.4 Issue of Inventory Items
INVENTORY ITEMS – CHECKLIST OF RECOMMENDED PRACTICES CHAPTER 2
6
2.5
Responsible
Parties
Recommended Control Measures
Management Lay down the policy and approval authority for disposal of inventory
items (e.g. defective or obsolete items).
Specify the disposal methods, such as donation or sale of usable items, or
disposal as waste and the considerations to ensure consistency in approval
of disposals.
Lay down the procedures for checking of inventory items before approval
of disposal and the witnessing process.
Store
Supervisor
Design a standard form for requests and approval for disposal of inventory
items.
User /
Storekeeper
Raise requests for approval of disposal using the standard disposal form.
Supervisor Approve the request for disposal and inspect the conditions of items before
authorization.
Conduct spot-checks while the disposal is in progress (e.g. on the items
and quantity).
Storekeeper Verify the approval given before releasing the items for disposal and
require the receiving staff to acknowledge receipt.
Update the inventory movement records without delay and send copies to
the accounts section.
2.5 Disposal of Inventory Items
INVENTORY ITEMS – CHECKLIST OF RECOMMENDED PRACTICES CHAPTER 2
7
Procurement
Staff
If the items are to be disposed of by sale, seek price quotations from
buyers through competitive means.
Document the offers properly.
Accounting
Staff
Update the accounting records according to disposal records.
2.6
Responsible
Parties
Recommended Control Measures
Management Lay down in guidelines the stock-taking and store inspection
requirements, such as levels of staff responsible and frequency of checks.
Require the staff responsible to report observations made during the
inspection.
Storekeeper Conduct regular stock taking against the inventory records and report
irregularities or stock depletion to the store supervisor.
Produce periodic inventory reports for management review (such as stock
in-take, issue, wastage, disposal, etc.).
Verify before the incoming storekeeper the physical stock against the
inventory records/ledgers whenever there are staff changes.
Require the incoming storekeeper to sign the handover records showing
the stock in store.
2.6 Inventory Check
INVENTORY ITEMS – CHECKLIST OF RECOMMENDED PRACTICES CHAPTER 2
8
Store
Supervisor
Conduct surprise inventory checks, in particular on the valuable items.
Ensure there is strong justification (e.g. normal wastage) before
authorizing adjustment of the inventory records if necessary and document
the justification.
Investigate and report to the management any abnormal stock depletion or
other irregularities.
Managerial
Staff
Review the inventory reports against any related data (e.g. normal wastage
and sales data) and initiate enquiry if there is any anomaly (e.g. stock
depletion).
Conduct ad hoc surprise physical stock checks as necessary.
Accounting
Staff
Conduct periodic (e.g. monthly) reconciliation of the accounting and
inventory records.
Conduct periodic (e.g. annually) physical inventory checks or
stock-taking.
Make enquiry into and report to the management any unusual stock
depletion or irregularities.
9
CHAPTER
Listed below are the key processes of management of fixed asset items. The
recommended control measures are provided in Chapter 4 (the relevant
paragraphs are quoted below).
Setting up a
Fixed Asset Management System
(4.1)
Receipt, Storage, Issue, and
Disposal of Items (4.2)
Inspection and Monitoring (4.3)
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FI IX XE ED D A
AS SS SE ET T I
IT TE EM MS S –
– K
KE EY Y P
PR RO OC CE ES SS SE ES S
Key Processes
10
CHAPTER
4.1
Responsible
Parties
Recommended Control Measures
Management Classify property items that should be recorded as fixed assets (e.g. based
on their type and value).
Lay down in guidelines the “ownership” of property items, i.e. the owner
departments responsible for their safe keeping and require them to keep
proper inventory records showing the staff given the items and the items’
movements (e.g. computer equipment and cameras).
Prohibit staff from swapping their assigned property items or move them
to different locations without the approval of the designated authority.
Require the owner departments to copy the fixed asset records to the
accounting department or head office (as appropriate) for central record.
Require the owner departments to conduct regular stock-taking and
inspection on the fixed asset items and specify the frequencies of such
checks.
Arrange an independent unit (e.g. the accounting department) to conduct
periodic inspections on the property items and report to the management
any irregularities, such as loss or damages).
Specify the approval authority for disposal of fixed asset items based on
their values, preferably at the management level and independent of the
owner departments.
Owner
Department
Lay down the procedures and authorities for the issue of property items to
individual staff, and the requirements for recording the items’ movements
and disposal.
Assign to each fixed asset item a unique identification number.
Maintain a property register or database to keep up-to-date records of all
fixed asset items, e.g. the item’s unique number, description, brand name,
model number and serial number (if any), user, location, dates of
manufacture and issue, and purchase price or estimated value.
F
FI IX XE ED D A
AS SS SE ET T I
IT TE EM MS S –
–
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CH HE EC CK KL LI IS ST T O OF F R
RE EC CO OM MM ME EN ND DE ED D P
PR RA AC CT TI IC CE ES S
Setting Up a Fixed Asset Management System 4.1
FIXED ASSET ITEMS – CHECKLIST OF RECOMMENDED PRACTICES CHAPTER 4
11
Assign a staff member of the appropriate level to control and manage the
property items, including:
issuing items to users;
keeping the items’ movement records;
notifying the management any unauthorized change in users or
locations of the items;
amending the inventory records only with the endorsement of the
designated authority;
arranging disposal of the items only with approval from the designated
authority.
Segregate the duties of asset management where practicable, e.g. separate
the record-keeping and disposal duties.
Accounting
Staff
Keep independent accounting records on fixed asset items.
4.2
Responsible
Parties
Recommended Control Measures
Receipt and Storage of Items
Designated
Staff
Adopt the procedures and control measures recommended in paragraph 2.3
as appropriate.
Label each valuable item showing a unique identification number.
Keep proper records of the items, with copies send to the accounting
section or head office for central record.
Adopt suitable safeguards as recommended in paragraph 2.2 to ensure the
items are in safekeeping while in store.
4.2 Receipt, Storage, Issue, and Disposal of Items
FIXED ASSET ITEMS – CHECKLIST OF RECOMMENDED PRACTICES CHAPTER 4
12
Issue of Items
Owner
Department
Adopt the procedures and measures recommended in paragraph 2.4 as
appropriate for the issue of fixed asset items to staff.
Designated
Staff
Ensure all property items (e.g. computer equipment and mobile phones)
issued on a personal basis are returned upon the staff leaving the company
or upon transfer to another post.
Disposal of Items
Owner
Department
Adopt the procedures and control measures as recommended in
paragraph 2.5.
Submit to the management periodic reports on the disposed items
including the quantity and total value.
4.3
Responsible
Parties
Recommended Control Measures
Owner
Department
Assign a responsible staff member to conduct periodic and annual
inspections as required on the property items in store or issued to users
against the fixed asset register or database.
Conduct enquiry into any missing items and take appropriate follow-up
action.
Produce periodic reports on fixed asset items for management information
(e.g. asset value, any asset lost, damaged or written off).
4.3 Inspection and Monitoring
FIXED ASSET ITEMS – CHECKLIST OF RECOMMENDED PRACTICES CHAPTER 4
13
Accounting
Staff
Conduct independent stock-taking and inspection on fixed asset items,
make enquiry into any irregularities (e.g. missing items), and report to the
management on the findings.
Management Review the fixed asset reports and initiate enquiry if there is any anomaly
(e.g. frequent reports of missing items, or frequent disposal/replacement of
valuable items).
Corruption Prevention Department
Independent Commission Against Corruption
303 Java Road, North Point, Hong Kong
doc_328436579.pdf
Tangible assets of an organization or a company can be broadly divided into two categories: inventory items and fixed asset items.
Best Practice Checklist
?????
Corruption Prevention Department
S
S
t
t
o
o
r
r
e
e
s
s
M
M
a
a
n
n
a
a
g
g
e
e
m
m
e
e
n
n
t
t
Tangible assets of an organization or a company can be broadly divided into
two categories: inventory items and fixed asset items. For the purpose of
this Best Practice Checklist, inventory items include saleable goods or raw
materials used for production by the organization or company. Fixed asset
items include those made available for use by the staff when conducting the
business of the organization or company, such as computers, office
equipment, and company cars, etc.
Past corruption cases showed that stores management is an area prone to
corruption. Staff having access or control over stores may be tempted to
misappropriate or misuse them for personal gain. There were also cases of
collusion between the suppliers and the stores staff, who condone acceptance
of inferior goods or short delivery, resulting in financial loss to the employer.
This Best Practice Checklist aims at providing organizations with a
user-friendly and step-by-step guide on stores management with
recommendations of safeguards to minimize risks of corruption or
malpractice. Organizations are expected to adapt the recommended
safeguards to suit their organizational structure, resources, risk exposures,
and any statutory requirements.
The Advisory Services Group of the Corruption Prevention
Department of the Independent Commission Against Corruption
provides free, confidential, and tailor-made corruption prevention
service to private companies on request. The Group also stands
ready to tender further advice to on how to apply the recommended
practices in this Best Practice Checklist to suit individual needs.
For more information, please contact the Group at :
Telephone no. : 2526 6363
Fax no. : 2522 0505
Email address : [email protected]
I
IN NT TR RO OD DU UC CT TI IO ON N
C
C
O
O
N
N
T
T
E
E
N
N
T
T
S
S
Pages
CHAPTER 1 INVENTORY ITEMS – KEY PROCESSES
1
CHAPTER 2 INVENTORY ITEMS –
CHECKLIST OF RECOMMENDED PRACTICES
2.1 Setting up an Inventory Management System 2
2.2 Security of Stores Facilities 3
2.3 Receipt of Inventory Items 4
2.4 Issue of Inventory Items 5
2.5 Disposal of Inventory Items 6
2.6 Inventory Check 7
CHAPTER 3 FIXED ASSET ITEMS – KEY PROCESSES 9
CHAPTER 4 FIXED ASSET ITEMS –
CHECKLIST OF RECOMMENDED PRACTICES
4.1 Setting up a Fixed Asset Management System 10
4.2 Receipt, Storage, Issue, and Disposal of Items 1 1
4.3 Inspection and Monitoring 12
1
CHAPTER
Listed below are the key processes in the management of inventory items. The
recommended control measures for each process are provided in Chapter 2 (the
relevant paragraphs are quoted below).
Setting up an Inventory Management
System and Security of Stores Facilities
(2.1 & 2.2)
Receipt of Inventory Items (2.3)
Issue of Inventory Items (2.4)
Disposal of Inventory items (2.5)
Inventory Check (2.6)
I
IN NV VE EN NT TO OR RY Y I
IT TE EM MS S –
– K
KE EY Y P
PR RO OC CE ES SS SE ES S
Key Processes
2
CHAPTER
Responsible
Parties
Recommended Control Measures
Management Lay down in guidelines the policies and procedures for inventory
management, including:
receipt, secure storage, replenishment, and disposal of inventory items;
conduct of inventory checks, handling of discrepancies, amendment of
inventory records, and handing over of stores, etc.
Clearly specify:
the authorities for inventory management activities (e.g. issue of stock,
disposal of inventory items, writing off and amendment of inventory
records); and
the roles and duties of the staff responsible for various inventory
management activities (e.g. storekeeper, store supervisor, procurement
and accounting staff).
Store
Managerial
Staff
Put in place a computerised inventory management system, if resources
allow, to maintain accurate inventory records and to facilitate control and
supervision, such as:
search keys for identifying an item or a batch of items, including the
item code and batch number, and data such as description of the item
and its location in the store;
stock movement transactions, including dates, quantities of incoming
or outgoing items, voucher references, the names of issuing or
receiving staff, etc.; and
stock information such as the expiry or validity date, and stock balance
of items in store.
Install a bar-coding system or radio frequency identifier technology to
further enhance control of inventory items, if resources permit.
I
IN NV VE EN NT TO OR RY Y I
IT TE EM MS S –
– C
CH HE EC CK KL LI IS ST T O OF F
R
RE EC CO OM MM ME EN ND DE ED D P
PR RA AC CT TI IC CE ES S
2.1 Setting up an Inventory Management System
INVENTORY ITEMS – CHECKLIST OF RECOMMENDED PRACTICES CHAPTER 2
3
Store
Supervisor
Segregate the following duties as far as practicable:
purchasing duties from inventory control duties;
storekeeping duties (duties involving physical access to inventory)
from inventory record-keeping duties;
storekeeping duties from inventory disposal approving duties.
Accounting
Staff
Maintain independent accounting records on inventory.
2.2
Responsible
Parties
Recommended Control Measures
Store
Managerial
Staff / Store
Supervisor
Ensure there is adequate physical security to safeguard items in stock,
having regard to their value. For example:
keep inventory in an adequately secure store room equipped with
electronic access control or a lock with the key kept by only the
storekeeper (the duplicate key should be kept in the accounts or
administrative section in a sealed envelope signed by two persons to
prevent unauthorized use);
if an electronic system is used, ensure access is controlled by
personalized security passes so that the identity of the staff accessing
the store is logged for future checking if necessary;
if necessary, install a CCTV system with recording function to monitor
movements at the store entrance and inside the store; and
if cupboards or cabinets are used for storage, ensure the keys are under
the control of a designated staff member to enhance accountability and
the duplicate keys are secured in the same way as for the store room.
2.2 Security of Stores Facilities
INVENTORY ITEMS – CHECKLIST OF RECOMMENDED PRACTICES CHAPTER 2
4
Lay down in guidelines the store security procedures as necessary. For
example:
restrict access to the storeroom to designated staff members only;
give personal access codes or passes to the staff strictly on a need basis
and instruct them to safeguard their own codes/passes;
record the names of persons given permission to enter the store room
on an ad hoc basis and the reasons;
change the access codes whenever there are staff changes;
require the store room to be locked at all times except when in use or
under guard; and
make spot checks to ensure compliance as appropriate.
2.3
Responsible
Parties
Recommended Control Measures
Procurement
Staff
Copy purchase orders to the storekeeper for him to keep in view delivery
to the warehouse.
Witness the receiving process and counter-sign the receipt in case of goods
ordered in large quantity or of high-value.
Storekeeper Inspect the goods received against the specification and quantity shown in
the purchase orders and certify receipt on the invoices or delivery notes if
in order.
Report any goods in excess, short delivery or defective goods to the
procurement unit or user as soon as possible.
Update the inventory movement records according to the certified receipts,
with copies sent to the accounting section.
2.3 Receipt of Inventory Items
INVENTORY ITEMS – CHECKLIST OF RECOMMENDED PRACTICES CHAPTER 2
5
Accounting
Staff
Update the master inventory accounting records according to the certified
receipts.
2.4
Responsible
Parties
Recommended Control Measures
Store
Supervisor
Design a standard form for requests for issue of inventory items.
User Raise requests for issue of inventory items using the standard request
form.
Supervisor Ensure that requests for issue are justified (e.g. supported by production
job orders) before endorsement as appropriate.
Storekeeper Verify the issue request before issuing the items and require the receiving
staff to acknowledge receipt on the form with a copy sent to the accounts
section.
Issue stocks on a “first-in first-out” basis, particularly for items with an
expiry date or a limited shelf life.
Update the inventory movement records without delay.
Accounting
Staff
Update the accounting records according to the request forms duly signed
by parties concerned.
2.4 Issue of Inventory Items
INVENTORY ITEMS – CHECKLIST OF RECOMMENDED PRACTICES CHAPTER 2
6
2.5
Responsible
Parties
Recommended Control Measures
Management Lay down the policy and approval authority for disposal of inventory
items (e.g. defective or obsolete items).
Specify the disposal methods, such as donation or sale of usable items, or
disposal as waste and the considerations to ensure consistency in approval
of disposals.
Lay down the procedures for checking of inventory items before approval
of disposal and the witnessing process.
Store
Supervisor
Design a standard form for requests and approval for disposal of inventory
items.
User /
Storekeeper
Raise requests for approval of disposal using the standard disposal form.
Supervisor Approve the request for disposal and inspect the conditions of items before
authorization.
Conduct spot-checks while the disposal is in progress (e.g. on the items
and quantity).
Storekeeper Verify the approval given before releasing the items for disposal and
require the receiving staff to acknowledge receipt.
Update the inventory movement records without delay and send copies to
the accounts section.
2.5 Disposal of Inventory Items
INVENTORY ITEMS – CHECKLIST OF RECOMMENDED PRACTICES CHAPTER 2
7
Procurement
Staff
If the items are to be disposed of by sale, seek price quotations from
buyers through competitive means.
Document the offers properly.
Accounting
Staff
Update the accounting records according to disposal records.
2.6
Responsible
Parties
Recommended Control Measures
Management Lay down in guidelines the stock-taking and store inspection
requirements, such as levels of staff responsible and frequency of checks.
Require the staff responsible to report observations made during the
inspection.
Storekeeper Conduct regular stock taking against the inventory records and report
irregularities or stock depletion to the store supervisor.
Produce periodic inventory reports for management review (such as stock
in-take, issue, wastage, disposal, etc.).
Verify before the incoming storekeeper the physical stock against the
inventory records/ledgers whenever there are staff changes.
Require the incoming storekeeper to sign the handover records showing
the stock in store.
2.6 Inventory Check
INVENTORY ITEMS – CHECKLIST OF RECOMMENDED PRACTICES CHAPTER 2
8
Store
Supervisor
Conduct surprise inventory checks, in particular on the valuable items.
Ensure there is strong justification (e.g. normal wastage) before
authorizing adjustment of the inventory records if necessary and document
the justification.
Investigate and report to the management any abnormal stock depletion or
other irregularities.
Managerial
Staff
Review the inventory reports against any related data (e.g. normal wastage
and sales data) and initiate enquiry if there is any anomaly (e.g. stock
depletion).
Conduct ad hoc surprise physical stock checks as necessary.
Accounting
Staff
Conduct periodic (e.g. monthly) reconciliation of the accounting and
inventory records.
Conduct periodic (e.g. annually) physical inventory checks or
stock-taking.
Make enquiry into and report to the management any unusual stock
depletion or irregularities.
9
CHAPTER
Listed below are the key processes of management of fixed asset items. The
recommended control measures are provided in Chapter 4 (the relevant
paragraphs are quoted below).
Setting up a
Fixed Asset Management System
(4.1)
Receipt, Storage, Issue, and
Disposal of Items (4.2)
Inspection and Monitoring (4.3)
F
FI IX XE ED D A
AS SS SE ET T I
IT TE EM MS S –
– K
KE EY Y P
PR RO OC CE ES SS SE ES S
Key Processes
10
CHAPTER
4.1
Responsible
Parties
Recommended Control Measures
Management Classify property items that should be recorded as fixed assets (e.g. based
on their type and value).
Lay down in guidelines the “ownership” of property items, i.e. the owner
departments responsible for their safe keeping and require them to keep
proper inventory records showing the staff given the items and the items’
movements (e.g. computer equipment and cameras).
Prohibit staff from swapping their assigned property items or move them
to different locations without the approval of the designated authority.
Require the owner departments to copy the fixed asset records to the
accounting department or head office (as appropriate) for central record.
Require the owner departments to conduct regular stock-taking and
inspection on the fixed asset items and specify the frequencies of such
checks.
Arrange an independent unit (e.g. the accounting department) to conduct
periodic inspections on the property items and report to the management
any irregularities, such as loss or damages).
Specify the approval authority for disposal of fixed asset items based on
their values, preferably at the management level and independent of the
owner departments.
Owner
Department
Lay down the procedures and authorities for the issue of property items to
individual staff, and the requirements for recording the items’ movements
and disposal.
Assign to each fixed asset item a unique identification number.
Maintain a property register or database to keep up-to-date records of all
fixed asset items, e.g. the item’s unique number, description, brand name,
model number and serial number (if any), user, location, dates of
manufacture and issue, and purchase price or estimated value.
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FI IX XE ED D A
AS SS SE ET T I
IT TE EM MS S –
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CH HE EC CK KL LI IS ST T O OF F R
RE EC CO OM MM ME EN ND DE ED D P
PR RA AC CT TI IC CE ES S
Setting Up a Fixed Asset Management System 4.1
FIXED ASSET ITEMS – CHECKLIST OF RECOMMENDED PRACTICES CHAPTER 4
11
Assign a staff member of the appropriate level to control and manage the
property items, including:
issuing items to users;
keeping the items’ movement records;
notifying the management any unauthorized change in users or
locations of the items;
amending the inventory records only with the endorsement of the
designated authority;
arranging disposal of the items only with approval from the designated
authority.
Segregate the duties of asset management where practicable, e.g. separate
the record-keeping and disposal duties.
Accounting
Staff
Keep independent accounting records on fixed asset items.
4.2
Responsible
Parties
Recommended Control Measures
Receipt and Storage of Items
Designated
Staff
Adopt the procedures and control measures recommended in paragraph 2.3
as appropriate.
Label each valuable item showing a unique identification number.
Keep proper records of the items, with copies send to the accounting
section or head office for central record.
Adopt suitable safeguards as recommended in paragraph 2.2 to ensure the
items are in safekeeping while in store.
4.2 Receipt, Storage, Issue, and Disposal of Items
FIXED ASSET ITEMS – CHECKLIST OF RECOMMENDED PRACTICES CHAPTER 4
12
Issue of Items
Owner
Department
Adopt the procedures and measures recommended in paragraph 2.4 as
appropriate for the issue of fixed asset items to staff.
Designated
Staff
Ensure all property items (e.g. computer equipment and mobile phones)
issued on a personal basis are returned upon the staff leaving the company
or upon transfer to another post.
Disposal of Items
Owner
Department
Adopt the procedures and control measures as recommended in
paragraph 2.5.
Submit to the management periodic reports on the disposed items
including the quantity and total value.
4.3
Responsible
Parties
Recommended Control Measures
Owner
Department
Assign a responsible staff member to conduct periodic and annual
inspections as required on the property items in store or issued to users
against the fixed asset register or database.
Conduct enquiry into any missing items and take appropriate follow-up
action.
Produce periodic reports on fixed asset items for management information
(e.g. asset value, any asset lost, damaged or written off).
4.3 Inspection and Monitoring
FIXED ASSET ITEMS – CHECKLIST OF RECOMMENDED PRACTICES CHAPTER 4
13
Accounting
Staff
Conduct independent stock-taking and inspection on fixed asset items,
make enquiry into any irregularities (e.g. missing items), and report to the
management on the findings.
Management Review the fixed asset reports and initiate enquiry if there is any anomaly
(e.g. frequent reports of missing items, or frequent disposal/replacement of
valuable items).
Corruption Prevention Department
Independent Commission Against Corruption
303 Java Road, North Point, Hong Kong
doc_328436579.pdf