Trick to Answer Verification of Assets Question in Exam:
Irrespective of the question given in the exam, you just need to write the following answer. All you needed to do is replace the ‘______’ with the question given. As an example, we used ‘Furniture’. You can replace it with any other Asset.
Steps involved in the Verification:
Schedule: The Auditor shall obtian a Schedule of Furniture from the Management, containing the total number of Furniture. and their values.
Accounting Standard: Verify whether the Furniture is valued and shown in the books of accounts as per AS 10.
Depreciation: Auditor shall confirm if proper rate of depreciation is charged on the Furniture.
Accounting Treatment: Check whether there are any additions or deletions of Furniture during the previous year. Also confirm if proper accounting entires are posted regarding the same.
Expert: The Auditor may take valuation report on the Furniture from a certified Expert.
Schedule III: Check whether the Furniture is properly disclosed in the Balance Sheet prepared as per Schedule III.
Loan Agreement: If the company has bought any loan by placing the Furniture as a Security, verifiy the Loan Deed.
Expenditure Vouching Shortcut Answer:
The process of examining the vouchers is called Vouching. The basic objective of vouching is to authenticate the transactions recorded in the books of accounts.
Few steps during this process shall include:
1. Authority: The Auditor shall ensure that all expenditures relating to ___________ has been approved by proper authority.
2. Appropriate account: Auditor shall verify that all transactions and entries of _________ has been posted to proper accounts.
3. External Confirmations: With the advent of latest scams, it is utmost important to not just rely on the management representations. Auditor has to obtain external confirmations to verify the balances of ________, as shown in books of account
4. Tax Compliance: Confirm whether the payments for _________ were made only after deducting the TDS at applicable rates.
5. Accounting Standard: Ensure that all the postings and adjustments were made as per AS ___
6. Cross Verification: All the vouchers relating to _________ shall be cross verified with the respective ledger accounts.
Also Read From FinApp:
What is the Purpose of Vouching?
Vouching is a part of Audit to authenticate the validity of the transactions of a business entered in the books of account. It also verified whether there is proper authority for sanctioning the vouching expenditure.
Functions of Vouching:
- Check whether the vouching date falls within the accounting period.
- Verify whether the voucher is duly authorised by the competent authority.