How to carry out Audit of Assets & Liabilities? – Check Complete List

How to carry out Audit of Assets & Liabilities?— When we sit to study audit, our standard concepts connecting to how to carry out the numerous audits must be really clear. The most important elements while auditing the financial statements of any business is the proper analysis of its possessions & liabilities. Here we will do a comprehensive study of how the assets & Liabilities should be audited.

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Audit of Assets

Let us take a look on the procedure to be followed in the case of Audit of Fixed Assets. The following elements need to be deeply verified.

  • Internal Controls: The control over expense on set properties; self constructed assets, responsibility and usage controls and information controls.
  • Correct Confirmation of Records: Records relating to acquisition of new fixed assets, enhancements to existing ones, self– constructed assets, capital work-in-progress, examination of expense accounts, audit treatments in regard of offered, damaged or scrapped possessions should be checked. Procedures to identify unrecorded deals in respect of such assets should also be carried out.
  • Physical confirmation: Aspects such as The Management’s duty in respect of physical confirmation, elements to be considered in examining the appropriateness as well as reasonableness of the physical verification conducted by the management should be re validated by the Auditor.
  • Valuation and Disclosure: Ensuring compliance with the usually accepted fundamentals of accounting, calculation of depreciation, revaluation of set possessions and using the work of specialists when it comes to revaluation etc., properties purchased for a combined price, joint ownership of possessions.

On the very same line, Audit of other Assets can be carried out.

Now, let us take a look on the audit of Liabilities.

Audit of Liabilities

The following is a summary of the relevant areas to be verified by the Auditors.

  • Internal Control Assessment in Respect of Trade Creditors, Existing Liabilities, Arrangements, Trade Deposits in addition to those above, payment on replicate billings, schedule of creditors, changes to lenders, accounts to be licensed, cut off treatments.
  • Evaluation of Records of Trade Creditors and Other Existing Liabilities: The cut off treatments, control accounts, documentary evidence, essential aspects to be seen in the schedule of creditors etc., year end transactions, subsequent occasions need to be understood & reconsidered.
  • Examination of Records of Provisions: The significance of arrangements, goals of audit of arrangements, arrangement for taxes and tasks, arrangement for gratuity, arrangement for reward, provision for dividend, other provisions should be verified by the Auditor.

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