The purpose is to certify ownership. Besides, any inappro­priate valuation of assets and liabilities, whether inadvertently or fraudulently done, would vitiate the financial state of affairs of a business by exhibiting a wrong picture in the balance sheet. An auditor should insist on the produc­tion of all cash balances at a time to prevent substitution with a view to covering up defalcations. Whether fictitious Assets are written off adequately, or not. These procedures are designed to ensure that the company’s financial statements are reported accurately. On a careful consideration of the afore­said information an auditor should make his own estimate of probable bad or doubtful debts and compare the same with the pro­vision made by the management. historical cost or original cost of acquisition (including ad­justments for additions including all ex­penses of bringing an asset into a reason­able condition or disposals) minus proper depreciation on a consistent basis irrespec­tive of the market value. Verification includes apart from (except) valuation “the examination of ownership right, the existence of the assets in business & its freeness from any mortgage”. The precise applications of the aforesaid criteria for ascertaining cost or market value of different groups of stock items are indicated in the undernoted table: Physical ex­istence of stock items represented by the stock figure in the balance sheet is usually verified by actual annual or half-yearly stock­taking arranged by the management and necessary reconciliation is made with book figures as per bin cards or store ledger accounts. Cost includes cost of purchase/acquisition or conversion, other costs in bringing the items to present location or condition. 4. Terms of Service 7. (e) If there is any history of bankruptcy or attachment of the funds and properties of any debtor. Stock is valued at a fixed cost per unit which may be regarded as a cost-budget for each item. The selective re­valuation processes as above are not avail­able under instructions for making out as­sets contained in Schedule VI to the Com­panies Act, 1956, which require that in case of any writing up of the asset(s) it must be shown at its increased figure in the Balance Sheet subsequent to such writing up. [CDATA[ The following are the main types of contingent liabilities: (i) Liability in respect of bills discounted or accepted on behalf of other par­ties, but not matured. In some cases a distribution of the borrower's assets over time is considered as a way to establish ability to repay the loan… If any liability under the aforesaid heads does not actually accrue on the date of the balance sheet it should be mentioned by way of a separate note on the liabilities side of the balance sheet, compulsorily in case of a company and preferably in other cases also—but the figures should not be extended to the money column. In practice, an auditor is obliged to depend on the system of internal control and to accept the certified inventory as the basic documents for checking the valuation of and also verifying the stock. (h) Checking provisions for allowances, discounts, bad and doubtful debts, if any. The exact implication of the terms cost and market price which should be clearly under­stood, are outlined below: It is assumed that the materials or stocks are used or despatched in the chronological order of their receipt so that the closing balance in hand would consist of the items acquired towards the end of the year. All the assets are included in the Balance Sheet of the organization and are shown clearly. Verification of assets means substantia­tion of the actual existence of assets under the legal ownership and/or possession of the clients on the date of balance sheet. and obtain a schedule of contingent liabilities certified by a responsible officer to the effect that all probable liabilities- under this head have been taken into account, as it may not be possible for the auditor to gain in the normal course of audit knowl­edge of all items of contingent liabilities. Arthur E. Green & Co. case clearly established that an auditor will be liable for negligence if he accepts a schedule of bad debts without being able to detect time- barred debts included therein. (ix) Possible personal liabilities of part­ners in a firm. Acquired for permanent or long-term reten­tion and use in the business for earning income. 3 principles. See if there is any debt which is already time-barred or is nearing the end of the period of limitation. Such variation may be the result of genuine factors operating in course of nor­mal business activities or it may be inten­tionally engineered by manipulation or fal­sification of accounts. He must make sure that all the assets shown in the Balance Sheet are actually present with the organization or not, the organization has valued them properly or not, they are free from all kinds of mortgages, etc. All assets are properly accounted for, as per the rules of the organization and legal provisions, or not All … (e in b.c))if(0>=c.offsetWidth&&0>=c.offsetHeight)a=!1;else{d=c.getBoundingClientRect();var f=document.body;a=d.top+("pageYOffset"in window?window.pageYOffset:(document.documentElement||f.parentNode||f).scrollTop);d=d.left+("pageXOffset"in window?window.pageXOffset:(document.documentElement||f.parentNode||f).scrollLeft);f=a.toString()+","+d;b.b.hasOwnProperty(f)?a=!1:(b.b[f]=!0,a=a<=b.g.height&&d<=b.g.width)}a&&(b.a.push(e),b.c[e]=!0)}y.prototype.checkImageForCriticality=function(b){b.getBoundingClientRect&&z(this,b)};u("pagespeed.CriticalImages.checkImageForCriticality",function(b){x.checkImageForCriticality(b)});u("pagespeed.CriticalImages.checkCriticalImages",function(){A(x)});function A(b){b.b={};for(var c=["IMG","INPUT"],a=[],d=0;d=b[e].o&&a.height>=b[e].m)&&(b[e]={rw:a.width,rh:a.height,ow:a.naturalWidth,oh:a.naturalHeight})}return b}var C="";u("pagespeed.CriticalImages.getBeaconData",function(){return C});u("pagespeed.CriticalImages.Run",function(b,c,a,d,e,f){var r=new y(b,c,a,e,f);x=r;d&&w(function(){window.setTimeout(function(){A(r)},0)})});})();pagespeed.CriticalImages.Run('/mod_pagespeed_beacon','https://www.allexamnotes.com/2016/12/verification/','uP5iJBn_Gq',true,false,'2XXkJg73bZI'); Resource: Assets are resources that can be used to generate future economic benefits In actual practice an auditor should apply reasonable care and skill and nor­mally take the following steps in respect of stock-in-trade in order to be able to prove, if necessary, that he exercised reasonable care and skill: (a) Carefully examine the system of internal control in force and note any possible loopholes therein. Disclaimer 8. It may be noted that reserve created on revaluation, if any, would not be available for distribution. PROPER VALUATION: The technique of verification … ("naturalWidth"in a&&"naturalHeight"in a))return{};for(var d=0;a=c[d];++d){var e=a.getAttribute("data-pagespeed-url-hash");e&&(! In such cases, an auditor should attend as early as possi­ble after the closing, carefully vouch cash transactions from the date of clos­ing up to the date of the visit and count the actual cash in hand on the latter date. Proof regarding proper valuation of assets. related to the assets. Confirmation about the existence of assets through physical verification. Breaking Down an Asset Verification Form Just like other property and business forms, an asset verification form will state the information of the owner and the details of his assets. Bundles of notes may be counted, checking some of them in detail. Post was not sent - check your email addresses! If a dis­crepancy still persists, casting and bal­ancing of the pass book itself may be checked. (a) A number of factors like technical up gradation, replacement cost, productivity and efficiency of the assets; or. Valuation of Assets and Liabilities of a Business: Auditor’s Duty towards Valuation of Assets: Verification of Assets and Liabilities of a Business: Auditor’s Duties towards Events taking Place after the Balance Sheet Date: Valuation and Verification of Particular Assets: (vii) Unexpired Expenses and Accrued Incomes. Whether all assets and liabilities are mathematically accurate or not. To check that transfer/disposal of any old assets is properly accounted for. 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