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Principles for verification of Assets

1. Existence
Whether an asset exists as on balance sheet date This is
ascertained by conducting physical verification of asset or
obtaining confirmation from the third party
2. Ownership
Whether an asset belongs to clients business
3. Rights
Whether any charge is created on the asset or whether the
asset has been mortgaged
4. Valuation
Whether the assets are properly valued as per accounting
standards or accounting policy applicable
5. Disclosure
Whether the asset is properly disclosed as per schedule VI
requirements
6. Completeness
Whether all the aspects of the asset are properly recorded
without omission
7. Internal control
Check the internal control in the recording of the asset and
proper safeguard of assets
8. Records and Registers
Whether appropriate records and registers are properly
maintained in case of the assets
Note: Intangible asset does not have physical existence
Existence is not applicable to Intangible asset

Exclusively for Fixed asset:
9. Depreciation
Whether the depreciation is properly recorded on the asset
as per AS -6 and Schedule VI requirements
10. Revaluation of the asset
Whether the assets are revalued and revaluation reserve has
been created
11. Worn out assets
Whether worn out assets are charged to P&L a/c
12. Caro 2003 on fixed assets
a. Whether proper records are maintained for fixed assets
b. Whether physical verification of fixed assets is done by
management within reasonable interval
c. Whether the going concern is affected if the substantial part
of the assets is sold
How do you verify?
Check, examine, verify and ensure
Specific principles in case of Intangible assets
13. Accounting Standards
Whether the assets are recorded as per AS-26
14. Amortisation (reduces the value of an asset)
Whether the assets are properly amortized
15. Renewal of Asset:
Check whether the assets are reviewed on a regular basis.
Ex: patent, copyright, trademark, paying some fee to
government for certain no of years
16. Valuation of goodwill
Whether goodwill is recorded only when money or moneys
worth is paid
Self-generated goodwill cannot be valued

Specific principles in case of current assets
17. Subsequent realization (only for certain CA)
Check the subsequent realization in case of asset after
balance sheet date.
18. External confirmation
Examine the confirmation of balance from third party in
relation to the asset (debtors, book debts, bills receivable,
stock held by third party)
19. Provision
Whether provisions are made for bad and doubtful debts in
case of debtors and book debts
Examine the provision on non moving stock
Provision in reduction of value of investments
20. Caro 2003 on inventory:
Whether proper records are maintained for inventory
Whether physical verification of inventory is done within
reasonable interval
Whether physical verification procedures are appropriate
21. Analytical Procedures
Analytical Procedures refers to analysis of financial
information using (financial and non financial data)
Compare the current year information with the previous year
information in relevance to the asset (book debts/inventory)