Several common audit procedures are used to ensure the existence of assets in a business. These procedures consist mainly of checking a company’s documents and comparing them with a physical inspection of the assets.
Standards procedures are used to verify that a company really owns the assets it claims to own. These procedures are designed to ensure that the company’s financial statements are reported accurately.
Common steps for auditing fixed assets begin with understanding the organization’s accounting policies and the assets' depreciation. A description of the assets is needed, along with the balance in each account, and any additions or depreciation expense that occurred in the period. The ending balance of each account is needed, as is a record of any disposed assets. These amounts are compared to the company’s general ledger, verifying accuracy. Invoices also should be randomly checked to verify the assets' accuracy.
After the company’s records are understood and investigated thoroughly, a physical existence check of all fixed assets is done. This is conducted by physically viewing each asset on the company’s list. The auditor also investigates the quality of the assets and if they're in use.