December 27, 2021

For verification of this item it would be essential to refer to agreement with Railway for availing of the facility. All expenses connected with the laying of the rails and making individual agreements, the amount paid to the Railway, if any should make up the cost. The cost of the railway siding should also be […]

Expenses when incurred for the development of any property and which cannot be conveniently added to the value of such property should be capitalized under this head and written off over the period during which the benefit from such development will accrue to the business. Examples may be expenses incurred in grading and preparing the

Where documents of title relating to assets held abroad are not available for inspection, a certificate should be obtained from the agent or any other party holding the document. Such a certificate must disclose unequivocally that they are free from any charge or encumbrance. The auditor should state in his report whatever evidence has been

The existence of a trademark is verified by an inspection of the certificate as regards grant of the trademark. Where it has been purchased, the agreement surrendering it in favour of the client should be examined. It must also be observed that the rights are alive and legally enforceable. Copyrights are also acquired by surrender

The ownership of a patent is verified by inspection of the certificate issued in respect of grant of the patent. It has been purchased, the agreement surrendering it in favour of the client should be examined. It must also be observed that the rights are ‘alive’ and legally enforceable and renewal fees have been paid

Investments are assets held by an entity for accretion of wealth by way of interest, royalties, dividends and rentals, for capital appreciation or for other benefits to the investing entity. It constitutes a significant portion of the total assets. An investment may be represented by Government securities, shares, debentures etc. The following procedure should be

The cost of ships, if purchased outright, should be verified on a reference to the Bill of Sale and, if built to order, from the agreements with the shipbuilders. The ownership of the title should be verified from the certified copy of the entry in the port of registration unless the same is endorsed on

A schedule of livestock at the close of the year should be obtained and entries in the same should be verified with the Register of Animals if it has been maintained. The entire stock of animals should be revalued on a uniform basis, from year to year, the cost of animals which have either been

The cost of these assets should be verified by reference to the invoices of suppliers and their ownership confirmed from permit and Registration Books. The auditor should also verify that the vehicles are covered by a comprehensive policy of insurance and adequate depreciation has been provided in respect of each of them. In case the

The cost of these assets should be verified by reference to the invoices of suppliers. All the expenditure incidental to their purchase also should be debited to the appropriate asset account. Further, the auditor should carefully scrutinise the details of the cost of additions debited to these accounts so as to ascertain that only the

Several entities have large investments in such assets which have a relatively short useful life and low unit cost. Evidently, it is a difficult matter, under the circumstances, to prepare a separate account for each such assets although a careful control over such property is necessary. On these considerations, some entities charge off small tools

In the absence of a Plant Register containing detailed particulars of various articles of machinery and equipment, showing separately original cost, addition to and sales from it from time to time. It is not normally practicable for the auditor to verify the existence of such assets. The auditors should therefore insist on a Plant Register