Asset Accounting Controls in remQ, and One Do-It-Yourself Control

Overview of Asset Accounting

Asset accounting is a crucial component of financial management that involves tracking and managing the company’s fixed assets throughout their lifecycle. This includes the acquisition, depreciation, retirement, and disposal of assets. Proper asset accounting ensures accurate financial reporting, adherence to tax regulations, and efficient asset utilization.

Risks in Asset Accounting

Several risks are associated with asset accounting, particularly when controls are weak or manual processes are used. These risks include:

• Misstatement of financial records due to inaccurate asset values or depreciation methods.
• Fraud or misappropriation of assets through unauthorized transactions or improper retirements.
• Non-compliance with tax laws, such as the improper capitalization of assets under construction or incorrect asset retirements.
• Operational inefficiencies, such as asset purchases without proper approvals or asset transactions recorded with incorrect codes.

Asset Accounting Controls

To mitigate the risks and ensure compliance, the following controls can be implemented, and are part of the remQ solution:

1. Assets Under Construction Not Capitalized
   • Background: Fixed assets under construction should be capitalized as soon as the payment is made. This ensures that costs are properly tracked and recorded in line with financial reporting standards.
   • Risk: Delays between invoice date and posting date can lead to increased tax payments or misreporting of asset values.
   • How to Detect: remQ analyzes invoices related to assets under construction with large time intervals between the invoice date and posting date, helping to prevent incorrect tax calculations.
2. Asset Retirement Prior to Useful Life
   • Background: A formal approval process is required for the sale, disposal, abandonment, or transfer of fixed assets before the end of their useful life.
   • Risk: Unauthorized asset retirement can lead to asset misappropriation or violations of local tax laws, particularly if the replacement value is calculated incorrectly.
   • How to Detect: remQ analyzes asset retirements to ensure that they occur at the appropriate time in the asset’s lifecycle, detecting any retirements made prior to the asset’s useful life.
3. Retirement of Assets Over the Critical Value
   • Background: Certain transactions, such as asset retirements, are recorded through specific transaction types in asset accounting. These need to be reviewed carefully, especially retirements without revenue.
   • Risk: Non-approved retirement of high-value assets can lead to financial misstatements or potential fraud.
   • How to Detect: remQ flags retirements made without revenue and detects instances where the net book value of the asset is above the predefined threshold, ensuring proper asset disposal procedures are followed.
4. Creation of an Asset and Entering a Purchase Order
   • Background: The acquisition of fixed assets requires creating an asset master record and a purchase order. Segregation of duties is necessary to prevent conflicts of interest.
   • Risk: Unauthorized purchase of fixed assets can occur if proper segregation between purchasing and asset accounting departments is not enforced.
   • How to Detect: remQ checks if the same user has both created the asset master record and the related purchase order, identifying potential conflicts in the asset creation process.
5. Unusual Transaction Types with Assets
   • Background: SAP provides over 250 transaction types for asset-related processes. Transactions outside of these standard practices should be carefully scrutinized.
   • Risk: Unauthorized transactions, such as retirements or revaluations, may be used to manipulate asset records or financial statements.
   • How to Detect: remQ monitors for infrequent or unusual transaction types in asset accounting, identifying any irregularities in asset-related transactions that warrant further investigation.

By automating these asset accounting controls, remQ significantly reduces the risk of fraud, ensures compliance with tax regulations, and improves the accuracy and efficiency of asset management processes.

Do-It-Yourself Control: SoD Violations for Asset Master Data and Recording the Acquisition of Fixed Assets

The conflict arises when a single user has authorizations to maintain both Maintain Asset Master Data (create or modify fixed asset records) and Record Acquisition of Fixed Assets (post acquisition transactions for fixed assets).

Scenario Example:

1. A user has access to transaction codes such as AS01 (Create Asset Master Record) or AS02 (Change Asset Master Record) to maintain or modify asset data.
2. The same user also has access to transaction codes such as F-90 (Post Asset Acquisition) or ABZON (Post Acquisition Without Vendor) to record acquisitions for those assets.
3. With both accesses, the user can create fictitious assets and post acquisitions against them, potentially enabling fraudulent activities such as misappropriation of company funds.

Risks Associated with this SoD Conflict:

1. Fraud Risk:
   The user could create fictitious assets or manipulate existing asset data and then record acquisitions, resulting in unauthorized transactions or financial misstatements.
2. Financial Misstatement:
   The combination of these two activities can result in incorrect asset values being recorded, impacting the organization's financial statements.
3. Asset Mismanagement:
   Unauthorized or inappropriate asset transactions may go undetected, leading to asset mismanagement or loss.
4. Lack of Audit Trail:
   If the same user performs both activities, it becomes difficult to trace errors or fraudulent activities due to a lack of segregation in the workflow.

Here is our Do-It-Yourself guide on how to identify this SoD violation in SAP, using the SQVI Query Viewer:

Step 1: Access the QuickViewer

1. Open the SAP GUI and navigate to the transaction SQVI (QuickViewer).
2. In the initial screen of QuickViewer:
   • You will see an option to Create, Change, or Display existing QuickViews.
   • Enter a name for your QuickView (e.g., TESTSODFA1) in the QuickView field.

Step 2: Create a New Query

1. Click the Create button to start creating a new QuickViewer query.
2. In the Create QuickView: Choose Data Source popup:
   • QuickView Name: Ensure the name entered matches the one provided on the initial screen (e.g., TESTSODFA1).
   • Title: Enter a descriptive title for the query (e.g., SoD FA).
   • Comments: Add any comments (optional) to describe the purpose of the query.
   • Data Source: Select the appropriate data source. For this guide:
     • Choose Table Join from the dropdown menu under Data source.