4. Transaction processing cycle

As a part of the outside project I decided to consider the processing cycle of the fixed assets used in the operating activity of JSC “Altyntau Resources”. As a result of exploration and gold ore mining JSC «Altyntau Resources» used the following classification of fixed assets:

1) Land 2) Buildings and structures 3) The mine workings 4) Machinery and equipment 5) Transportation 6) Tools

7) Others 8) Computer engineering 9) Reclamation 10) Construction in progress 11) Equipment for installation

Transaction cycle of fixed assets includes:

Acquisition of fixed assets

Depreciation of fixed assets

Fixed assets receipt

Fixed assets obtained free of charge

Disposal of fixed assets

5. Major account balances that are impacted by the transactions process

The fixed assets account is represented by the account 2410 of the section 2400 “Fixed Assets” (FA). To the extent of major account balances affected by the transaction process we can apply the mainly the account 2410 (which at the same time can be classified into the 2411 - "Land", 2412 - "Buildings", 2413 - "Machinery, equipment, etc.) and other accounts including the receipt of the fixed assets that can be represented by the credit accounts: 3311.1, 3311.2 – reflection of the purchase price of the FA, VAT offset; 1010, 1030 – payment to supplier. Other accounts that can be affected represent the receipt of the FA free of charge: Dt: 2410-2416 and Cr 6282. The disposal of the FA is recorded using the accounts: Dt 7410 – write-off of the residual value and Cr 2410-2416; the accumulated depreciation write-off: Dt 2420 Cr 2410-2416; the submission of the payment: Dt 1030 Cr 1210-1220. These are the main accounts that can be affected by any of the transaction processes.

6. Major risks that will affect the correctness of processing

The major risks that will affect the accuracy of processing will be:

- The risk of equipment failure. Technical equipment and machinery may at any time fail (mechanical wear and tear, improper operation) - The risk of neglecting the receipt and disposal of fixed assets in the enterprise. Substantial risk, taking into account assets may be affected unaccounted admitted assets, as well as the disposal of fixed assets, not confirmed by documents. - The risk of moral and physical depreciation. In the firm there is always a risk of deterioration of the equipment that must be considered in advance, using different measures for timely repair of fixed assets. - The risk of unrecorded assets in inventory. In carrying inventory (control) plant and equipment, there is always a risk of neglecting the equipment (no inventory numbers, the lack of documented existence of fixed assets in the company) 7. An overview of the process and the controls in the process

The five elements of the internal control include the:

1. Risk assessment: as it was mentioned before the analysis of the financial statements to prevent the occurrence of the financial misstatement is the core responsibility of the management team of the company, thus they implement the overview of the internal controls related to the risks.

2. Control environment: the corporate accounting policy demonstrate the fact that the management of the company is highly concerned about the internal policies and ethical conduct within the company.

3. Control activities: the JSC “Altyntau Resources” elaborated the corporate accounting policy that contains the methods of accounting used in the company. This policy is accepted by the company to avoid the occurrence of misstatements thus to reduce the risk of misleading financial statements.

4. Information and communication: the company’s management team and employees communicate and work with the high level of integrity thus creating the exchange of information within the company. The management of JSC “Altyntau Resources” pays significant attention to the preparation of valid and confident information for the audit committee in order to implement effective audit procedures to assure that all statements are free of mistakes.

5. Monitoring: As the management of the company is responsible for the preparation of the reliable financial statements, they are strived to implement precise and effective monitoring of the financial data to develop the strong internal control over the reporting.