Physical verification of fixed assets is a procedure used by auditors to ensure that the assets listed in an entity’s books of account exist. The management’s major role is asset verification. Any firm must complete this process after each financial year. Physical asset verification is a crucial part of auditing. An audit isn’t complete without asset verification. Auditing is performed at the end of each fiscal year to assist in determining an organization’s worth value. As a result, it is a crucial aspect of the business.
Physical verification aids in the identification of all assets held by the company, as well as their precise location, service status, and so on. As a result, physical verification is critical for all businesses. These are the objective of physical verification of fixed assets.
- To be certain that the assets listed on the balance sheet are accurate, authentic, and real. To determine whether or not assets exist.
- Check to see if all of the listed papers are legitimate.
- To determine whether the asset’s condition as described is correct.
- One of the primary goals of verifications is to determine asset ownership and title.
- To show the right asset and liability value.
- Maintain a high level of compliance.
- To check that purchased assets are accurately listed and that sold assets are not included.
- After depreciation, verify that the asset’s genuine worth is represented.
- Because assets may be misused or stolen, verification is done to detect fraud.
The assets are validated through their physical presence at a specific location during this process. Following physical verification, the auditor reviews all asset-related data, including status, location, purchase date, last service date, and other documentation, among other things. This is done to see if all of the assets are present and have the correct information. The asset’s ownership is also examined because it can be sold, stolen, or leased. In the same way, an asset’s title or deed is checked. It’s done to see if the asset is in the hands of the appropriate owner. As a result, physical verification of fixed assets is critical.
