In almost every kind of Audit i.e whether stat or Internal, We have to deal with the Fixed Asset Accounting Process. There are many areas which we can oversee during over Fixed Asset Accounting Audit. But Following below are few areas which should be focused during Audit of Fixed Asset Accounting.
Fixed Asset Accounting Audit
- Fixed Asset Accounting Audit
Major Risks in Fixed Asset Accounting Audit
- Inappropriate accounting for loss or Profit of fixed assets.
- Inaccurate computation of depreciation on Fixed Assets
- Capital items are erroneously coded to an expense account.
- Assets sold out but present in books and Vis – a -vis.
- The property remains on books after disposal
- No or inaccurate protection of fixed assets and Inter-divisional asset transfers not monitored or recorded.
- Inaccurate capital expenditure policy.
Following Checks Must be Done for Fixed Assets
Following Checks Must be Done for Fixed Assets Accounting risk assessment and finding above observations.
- Verify the depreciation rates entered into the system or in case of manual calculation verify the same
- Check whether the proper posting of entries is done in the system after computation of profit/loss on sale of an asset.
- Whether Are all the assets adequately insured
- The periodicity of Physical Verification. Does any independent person accompany the FA Team or in case of PV Done by team check latest Physical verification report.
- Is the Fixed Asset Register shared with the Administration Department for the FA maintenance?
- Do the FA records maintained by the Admin department tally with the FA Register maintained by Finance Department?
- Are the individual assets tagged as to their asset number i.e Coding is done or not
- In case of any inter-divisional / branch asset transfer, has proper approval been sought and has the location of the asset been changed?
- Check gate pass register where Asset is sent for repair or any job work.
- Physical asset assigned to employees are properly documented through URF filled by Employee
- Check capitalization policy of the Company.
If you perform Fixed Asset Audit in SAP Environment
If you perform Fixed Asset Audit in SAP Environment following T Codes would be required by you.
| Module | T-Codes | Report/Output |
| Finance | AR01 | Assets Balance Display |
| Finance | AR02 | Asset History |
| Finance | AS03 | Display Asset Master |
| Finance | AW01N | Depreciation of particular asset & other related value related info |
| Finance | F01 | Balance sheet and Profit & Loss / Trial Balance |