What Are the Audit Procedures to Verify the Fixed Assets?-Accounting and finance

Substantive procedures

substantive trials for adding ups during the time:

For Purchased Fixed Assets:

1. Gain a list of all fixed benefits purchased through the period and agree with the set assets agenda and fixed benefits record (entirety and occurrence).

2. Check approval of the buy of fixed possessions.

3. Select a sample of additions and agree on the cost to the supplier’s invoice. Also, scrutinize invoices to confirm cost does not comprise income fixed cost(valuation).

4. Review repair and maintenance accounts to verify repairs do not include capital expenditures. (completeness)

5. Inspect sale deed, purchase invoices, and legal documents as evidence of transfer of ownership in the name of the company. (rights and obligation)

For self-constructed Fixed Assets:

1. Gain a list of all set advantages constructed during the stage and concur with the fixed property schedule and fixed property register (completeness and occurrence).

2. Select an example of costs and concur with behind documentation i.e.:

 Site gaining costs to acquire invoice and lawful papers/inspector’s report.

·        Materials (such as cement, bricks, fittings) to suppliers’ invoices.

·        Labor costs to approved payroll records and timesheets

·        Overheads to relevant evidence

4. Physical inspection of the construction at the year-end to confirm work to date and assess the reasonableness of stage of completion.

5. Borrowing costs associated with the project should be recalculated to ensure its accuracy.

6. Ensure that depreciation starts as and when assets become ‘available for use.

7. Review expert's assessments to be compared with actual cost and significant differences should be investigated.

Substantive Procedures for disposals during the year:

Substantive procedures


             I.             Gain a list of all fixed property willing of during the era and agree with the fixed property schedule and fixed property register (wholeness and Occurrence).

              II.            Check authorization of the disposals of fixed assets.

           III.      Check that cost and accumulated depreciation has been removed from books of accounts.

1.   Review Fixed Assets' Register to ensure:

·        Reduction has been charged on all depreciable fixed property.

·        Depreciation on adding up starts when the advantage is available for use.

·        Fully devalue property are separately particular and no reduction is charged on such property.

2.   Check whether the remaining value, useful life/reduction rate, reduction method are:

·        Reasonable (considering nature of asset), and

·        Consistent with last time and manufacturing practice and AFRF.

3. Recalculate depreciation expense (using analytical procedures) and compare with the actual expense to ensure the reasonableness of depreciation expense.

4. Check whether the allocation of depreciation expense between manufacturing and operating expenses is on a reasonable basis. 5. Review gain or losses on disposal as an indication of possible understatement or overstatement of depreciation expense. (if the reduction is sensible, there should not be important gain or defeat).

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