Maintaining financial recorder Essay Example | Topics and Well Written Essays - 1500 words

Maintaining financial recorder - Essay Example All business require tangible fixed assets which are defined by IAS 16 as â€Å"tangible items that a) are held for use in the production or supply of goods or services for rental to others or for administrative purposes and b) are expected to be used during more than one period† (IASB 2008). Typically these include land, building, office, fixtures and fittings etc. which are deemed necessary to operate and carry out different activities. The fixed assets are for long term and their acquisition involves large amounts of funds which companies need to raise either through internal equity or by borrowing from financial institutions. Therefore, the authorization of the purchase of fixed assets requires delegation of authority to individuals who may be involved in maintaining fixed asset system or overlooking the entire purchase process. The procedures for the authorizing individuals of the purchase of fixed assets should be part of the company’s policy that should clearly s et out the positions and authority levels of individuals who can direct purchase of fixed assets. The delegation of authority depends upon the structure of the company and also relies on the nature of the business that the company is operating in. Capital expenditures which are beyond limits of individuals at departmental levels have to be authorized by the higher management. In addition to tangible fixed assets there are also intangible assets which include goodwill, brand, trademarks, copyrights which are purchase and authorize Asset acquisition typically initiates from the departmental manager assessment of the requirements of his / her department in terms of fixed assets to be purchased. These involve either purchase of a new asset or replace an existing one. The authorization of departmental managers is assigned and managed according to the price level of fixed assets that could be ordered. Departmental managers can authorize purchase of fixed assets