The fixed asset acquisition procedures for Turner Brothers, Inc., are as follows:Supervisors in the user departments determine their fixed asset needs and submit bids or orders directly to contractors, vendors, or suppliers. In the case of competitive bidding, the user makes the final selection of the vendor and negotiates the prices paid. The assets are delivered directly to the user areas. The users inspect and formally receive the assets. They submit the invoice to the cash disbursements department for payment.Discuss the risks associated with this process. Describe the controls that should be implemented to reduce these risks.
The fixed asset acquisition procedures for Turner Brothers, Inc., are as follows:Supervisors in the user departments determine their fixed asset needs and submit bids or orders directly to contractors, vendors, or suppliers. In the case of competitive bidding, the user makes the final selection of the vendor and negotiates the prices paid. The assets are delivered directly to the user areas. The users inspect and formally receive the assets. They submit the invoice to the cash disbursements department for payment.Discuss the risks associated with this process. Describe the controls that should be implemented to reduce these risks.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The fixed asset acquisition procedures for Turner Brothers, Inc., are as follows:
Supervisors in the user departments determine their fixed asset needs and submit bids or orders directly to contractors, vendors, or suppliers. In the case of competitive bidding, the user makes the final selection of the vendor and negotiates the prices paid. The assets are delivered directly to the user areas. The users inspect and formally receive the assets. They submit the invoice to the cash disbursements department for payment.
Discuss the risks associated with this process. Describe the controls that should be implemented to reduce these risks.
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