2. Presented to:
Prof. Iftikhar Ahmed

4. Verification of assets is a process
by which the auditors examine
the accuracy of the assets
appearing in the balance sheet.

5. It is an asset, with a useful life of over one year, owned &
used by a project to achieve its stated objectives
Examples are:
Plant and Machinery
Property and equipment
Computer
Furniture
Vehicle
Photocopier etc…

6. ► It is a manual or computerized record of fixed assets
► It contains details of assets – make, model, specifications, quantity,
rate, value, supplier, receipts, issues, balance, location etc. It also has
the date of receipt of the asset & the payment voucher reference.
► Each class of assets will have a separate page in the FAR
► Entry in FAR should be made before payment is released to the
supplier
► Any alteration in the FAR must be duly authorized
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7. ⇉ While the FAR is maintained according to class of assets, the FAIR is
maintained according to the staff member who holds the asset.
⇉ It will record the date of issue & return of each asset
⇉ It will bear the signatures of the employee when he receives the
asset & that of the storekeeper the asset is returned
⇉ The register helps in locating assets at the time of physical inventory
taking
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8. ► Conducted by an inter departmental team
► Should be undertaken under the supervision of external/ internal
auditors at least once a year
► Surprise checks during audit/supervision visits
► To verify existence, condition & custody of assets
► Physical balances compared with book balances
► Variances have to be adjusted in financial records after due
authorization
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9. 1. Auditor should vouch the purchase of a plant with
the receipts and invoices.
2. It should also be checked that all the expenditure on
this account is a capital charge.
3. If the plant is erected by the client own name then
auditor should check that allocations of plant has been
made correctly.

10. 4. Auditor should check the schedule of the plant
and machinery which should be certified by the
engineer.
5. Auditor should also do the physical checking of
the machinery if possible.
6. Auditor should also verify that sufficient
amount of depreciation is provided for this asset
or not.

11. Verification of property
and Equipment
• Use of a plant and equipment capital budget
• Maintenance of a subsidiary ledger
• A system of authorizations
• Analysis of variances from budgeted expenditures
• Periodic physical inventories
• A system of retirement authorization and
documentation

12. Impairment of Long-Lived Assets
• Long-lived assets must be reviewed for
impairment whenever events or changes in
circumstances indicate that carrying value may
not be recoverable
• Test involves projecting future cash flows
• If impairment is indicated by cash flows asset
must be written down to fair value
• May require the use of a valuation specialist

13. Valuation and Disclosure
The auditor should satisfy himself that
the fixed assets have been valued
and disclosed in the financial statements
according to the generally accepted
bases of accounting which are
determined by law

14. Audit of Intangibles
• Assets with definite useful lives are audited
similar to property, plant and equipment
• Assets with indefinite useful lives (e.g.,
goodwill) must be tested for impairment
• Auditors generally rely on business valuation
specialists to value goodwill for tests of
impairment

15. A patent is an official document which secures to an
investor the exclusive right to make use or sell his
invention.
A. The auditor should check the patent register in order to
verify that it has been properly included therein.
B. The auditor should also ensure that the legal life of the
patent has not yet been expired.
C. The latest renewal certificate of the patent should also
be verified by the auditor.

16. Auditor should verify the trademark with the help
of relevant documents.
He should examine the schedules and check that
all these are certified by the responsible officer or
not.
 If any agreements made it should also be checked
by the auditor.
 Auditor should also check that renewal fees have
been charged or not.
VERIFICATION OF TRADEMARKS

17. Copyright
A copyright is the exclusive legal
right to produce and reproduce
some kind of literary work.

18. Auditor’s duty regarding verification
The auditor should see that the value of copyright is
determined on properly basis including the period of
copyrights.
It should be confirmed that the legal life of copyright
has not been expired.
It should be seen that the copyright having no
commercial value has been written off.
The auditor should ask the schedule from the client
and examine thereof.