Audit of fixed assets: theory and practical advice

The activity of any enterprise is necessarily connected with the use of fixed assets, such as equipment, machines, buildings, cars, as well as various intangible assets, which can also be considered as OS. An audit of fixed assets at an enterprise is necessary sooner or later, since even the best accountant using the most advanced technical means of working with accounting will necessarily make some mistakes that could lead to a sufficiently significant distortion of the results of financial reporting. Moreover, the error can sneak in at any stage of accounting: it can be the registration of primary documents, the recording of business transactions in registers, and the presentation of data in the ledger and, as a result, in the financial statements. That is why audit procedures are absolutely necessary, because they lead to the improvement of the enterprise accounting system.

It should be noted that among audit procedures, audit of fixed assets is not the only type of verification. There are many other audit procedures. These can include, for example, audit of accounts receivable and payable, inventory audit, audit of invested capital. The most important type of audit is the audit of financial results of the organization. Due to this type of audit, the management of the enterprise knows exactly whether there have been any irregularities in the preparation of financial statements and determining the financial result of the company's work for a certain period. If no significant violations and errors were found, this means that all taxes, dividends to shareholders were paid correctly, and the company can continue to develop in the way it planned.

The audit of fixed assets consists of several stages - planning of audit, conclusion of an audit agreement, drawing up of a verification program, proper carrying out of verification procedures and the formation of an output based on the information received. In order to obtain the necessary information, it is necessary to check the OS objects for compliance with the following criteria:

Existence - this criterion means that the auditor must personally verify that the OS object specified in the documents, be it a machine, a building or a car, actually exists in the form and condition in which it passes through the documentation. To do this, the auditor needs to make an inventory of the OS objects, during which it is personally convinced of the existence of all the operating systems recorded in the documentation.

Ownership is another important criterion. The examiner should establish whether the enterprise actually owns the objects of the OS indicated in the balance sheet, for which it checks the primary documents and the terms of delivery of fixed assets.

The third and, perhaps, the most important, the criterion is evaluation. An audit of fixed assets is not possible without verification of the correctness of the assessment of the OS and also the accrual of depreciation. The examiner must ensure that the method of calculating depreciation corresponds to the one chosen in the accounting policy order, and that all accruals are mathematically correct.

After the audit of fixed assets is completed, the auditor draws a conclusion about the state of affairs in the enterprise, which, depending on the detection of various kinds of violations, can be positive, positive with reservations, or negative, if the detected violations can substantially distort the further reflection of the financial condition of the enterprise in Reporting.
Regular audit of fixed assets will become a guarantee of absence of any violations in accounting, and, therefore, will ensure the absence of a heartache and headache for the head of the company for many years.