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Every business needs to ensure regular Fixed Asset Verification for the purpose of tracking and asset inventory management.Asset Reconciliation is a time saving mechanism enabling more effective utilization of manpower reducing cost to company and frivolous man-hour spends.It includes financial history as well that assists organizations in making informative decisions.
These can be maintained at department, business, location and corporate level and a periodic reconciliation is needed to ensure the veracity of these records. Ideally, a quarterly audit of movable fixed assets is recommended, though this can vary from industry to industry.
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- To know that assets that are shown in the balance sheet are true, genuine, and real.
- To know whether assets exist or not.
- Check all the documents mentioned are valid or not.
- To check the assets condition as mentioned is correct or not.
- Find out the ownership and title of the assets is one of the main objectives of verifications.
- To show the correct valuation of assets and liabilities.
- Manage compliance.
- To see if purchased assets are mentioned correctly and sold assets are excluded.
- To ensure that the true value of the asset is represented after depreciation.
- Verification is done to detect fraud because assets might be misused or stolen.
Following are the main techniques for physical verification of asset audit:
- Asset physical existence
This technique is used for verifying assets physically exist or not. These assets could be any or immovable property.
- Purchase asset for business
It is verifying that asset is purchased for the company by the company. The aim of this technique is verify & check the purchased assets. It shall not be in the name of any employee.
- Asset ownership
This technique is used for identifying ownership of the asset. It must be in the name of the business, and it should not be on the lease. Deeds and purchase documents are also verified.
- Correct asset evaluation
This asset technique is used for calculating the correct asset value. Management estimates the value of assets, and the auditor verifies them by cross-checking documents, and the auditor verifies them by cross-checking records and physically inspecting assets.