Internal Controls — Inventory & Capital Asset Management

• All transactions are made and approved by authorized individuals.
• All inventory items are subject to effective custodial accountability procedures and physical safeguards.
• All receipts and withdrawals of inventory are properly recorded, and the records reflect actual quantities on hand and that the receipts and withdrawals are made by authorized individuals.
• All capital asset transactions are initiated by authorized individuals in accordance with established criteria.
• Advance approval is obtained for all significant capital asset transactions.
• Adequate project cost records are maintained, and in-progress and completed project reports are issued.
• All capital assets are accurately recorded in detail records, which are compared with existing assets at reasonable intervals.
• All capital assets are adequately safeguarded.
• All capital assets transactions are properly accumulated, classified and summarized in the general ledger accounts.

• Equipment or other assets can be used without authorization. 
• Fictitious purchases or payments are made to contractors or suppliers, with or without kickbacks to employees.
• Assets are physically lost by employees or outsiders through inadequate security or insurance coverage.
• Actual costs exceed projected amounts; overpayments are made to contractors.
• No basis exists for comparing actual usage with expected usage, resulting in the inability to determine material reorder points.
• Financial statements are misstated or inaccurate; losses, shortages, or material defects in reported assets are concealed.
• Conflict of interest exists for vendor purchasing arrangements.
• Expenditures in excess of originally approved amounts without authorized review and/or approval
• Costs are miscalculated between capital and operating budgets.
• Assets are disposed of without authorization, or proceeds are diverted from sales of assets.
• Obsolete or otherwise nonproductive assets continue to be owned and insured.