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Valuation and Verification

In: Business and Management

Submitted By bcomtourism2012
Words 5789
Pages 24
OF ASSETS AND LIABILITIES Spicer and Pegler have defined verification as “it implies an inquiry into the value, ownership and title, existence and possession and the presence of any charge on the assets”. Thus, verification includes verifying :- * The existence of the assets * Legal ownership and possession of the assets * Ascertaining that the asset is free from any charge, and * Correct valuation * auditor’s object According to the `statement of auditing practices’ issued by ICAI, “the auditor’s object in regard to assets generally is to satisfy that :- * They exist. * They belong to the client. * They are in the possession of the client or the persons authorized by him. * auditor’s object * They are not subject to undisclosed encumbrances or lien. * They are stated in the balance sheet at proper amounts in accordance with sound accounting principles, and * They are recorded in the accounts.
Existence : The auditor should confirm that all the assets of the company are physically existing on the date of balance sheet. Possession : The auditor has to verify that the assets are in the possession of the company on the date of balance sheet.

Ownership : The auditor should confirm that the asset is legally owned by the company.
Charge or lien : The auditor has to verify whether the asset is subject to any charge or lien.
Record : The auditor should confirm that all the assets and liabilities are recorded in the books of account and there is no omission of asset or liability.
Audit report : The auditor has to report whether the management has conducted physical verification of fixed assets and stock and the difference, if any, between the physical inventory and the inventory as per the book.
Event after balance sheet date : The...

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