Menu
Home > Policies > Policy & Procedure >
Policy & Procedure
Policy Title :
Fixed Assets Policy
Policy Number :
IV.A-10
Responsible Party :
Financial Affairs
Effective Date :
28/11/2013
Revised Date :
_______________________

Purpose

To ensure that all fixed assets are properly accounted and their corresponding depreciation expense is recognized and correctly recorded every month.

Statement :
Procedure :
  • Prepare a fixed assets schedule or working paper tallied with the general ledger balance using the attached format.
  • Ensure that all assets have an asset tag and confirmed as physically present by the person in-charge of monitoring the asset(s).
  • Ensure that the cost center for each asset is defined so that the depreciation expense is charged correctly.
  • Depreciation of property and equipment is recognized over the estimated useful life of the asset as follows:
    Asset Useful Life (Years)
    Buildings 30
    Furniture and equipment 5
    Software 5
    Vehicles 5
    Communication Sets 5
    Computer System 5
    Copy machine printers 5
    Asset below SR 1000 4
  • Ensure that the total value of assets per general ledger after deducting the corresponding accumulated depreciation is equal to the net book value of assets per working paper.
  • Assign Five (5) Saudi Riyals as salvage value of assets or deduct Five (5) Saudi Riyals at the last month of recognizing the depreciation expense.
  • Maintain the fixed asset salvage value of one (1) Saudi Riyal even if the assets are fully depreciated when it was still in use.
  • Assets salvage value should be written off only upon receiving an advice or letter from the person in-charge of the fixed assets that the particulars items are already defective and for retirement. When the retirement was approved by the authorized signatories, adjustment should be made per accounting by debiting the accumulated depreciation of the asset for retirement and its acquisition cost, the difference should be recognized as loss for the University.
  • When the disposed assets are replaced, the person in-charge of the fixed assets monitoring should assign an asset tag for the new assets, will define its location and forward the data to accounting to update the record together with the invoices for payment.
  • A physical count of fixed assets should be made once a year at the end of the accounting period to ensure that all assets in the records still exist.  Reconciliation should be made by the person in-charge and the variance report should be forwarded to the PMU Rector and Director of Financial Affairs for remedial action.