How An Auditor Analyze The Plant And Machinery Assets Of A Business Company?
Auditing includes documenting each and every security of the corresponding company. As per the present situation, these respective companies should
- Maintain a Fixed Asset Register with the filled-in details about the current location, stock purchase details, capitalized expenses and so on. Further, the Auditor should consider verifying these particulars and see if it is recorded on fair terms.
- In accordance with the Companies Act, 1956 all the secured assets need to be manually examined by the management itself. So, it is the duty of the Auditor to check with this concern that such a step was undertaken or not. Proceeding, he must check with the papers pertaining to the same and in case of any discrepancy, a detailed query should be conducted till a reasonable solution is obtained for the same.
- Moreover, reviews should be made on the venture’s new asset purchase while comparing with the purchase invoices and other norms regarding the installation of these items.
- Additionally, calculate the total amount that the plant and machinery sector hold as per the register book and ensure if it gets tallied with the merger account details maintained in the financial book of record.
- Also, if any product of the plant and machinery is traded or has been scrapped, then the Auditor should evaluate if the relevant entries are made for the same and the corresponding details are permanently removed from the Fixed Asset Register.
- The depreciation process is another fact that should be neatly recognized on. The Auditor should see if quality depreciation is made on the items of the plant and machinery section and this should be consistently followed for the coming years too.
- The Auditor should examine the registration details of the entire plant and machinery unit and see if, these are owned by a client who is free from any charges or encumbrances. In addition, the plant should not face any liabilities. If in case, any property of this department has been mortgaged, then he has to verify with the related document forms and also note if these are mentioned in the Balance sheet of the company.
- Details regarding the profit buy of each machinery or tools have to be in the account of the Register book.
- The maintenance unit of these assets and the related expense or cost should be listed in the records and the Auditor should have the knowledge on this.