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Physical Verification of Fixed Assets

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Physical verification is a procedure performed by an auditor to confirm the existence of tangible assets recorded in the client’s books of accounts. The auditor may also use this to check the condition of those assets. The physical verification is generally performed at the end of every financial year.

In organizations where multiple classes of assets exist and in different offices & departments, keeping track of them can be a formidable task. It has been one of the topmost priorities for the finance and admin teams, for they are accountable for resource management.


  • Statutory compliance as per CARO 2020 (replaced earlier order under CARO 2016)
  • Ensures the physical existence of assets
  • Valuation and rectification for any accounting discrepancy
  • Internal compliances of the organization
  • Critical for continuous customer service

Physical verification of fixed assets is also an essential part of fixed assets management. Physical verification should be done at regular intervals & there are many benefits of assets tracking and verification as:

  • Monitoring of assets movement between locations,
  • Saving in time and money in replication of assets between departments,
  • Put a reasonable control over theft of assets.

The fixed asset management process

  • Recording of fixed assets
  • Tracking of the location of fixed assets
  • Maintenance of fixed assets
  • An accurate valuation of depreciation
  • Various reports under various regulations
  • Physical verification of fixed assets at regular intervals

Following are the procedures for physical verification of fixed assets:

  • Keeping track and managing fixed assets is critical & compulsory and maintaining a Fixed Assets register helps simplify the process. Check fixed assets register and insurance agreement (if any). A fixed assets register typically record the following data:
    • Netbook value,
    • Current and accumulated depreciation rate,
    • Location of the asset,
    • Custodian rate,
    • Cost of the asset,
    • Asset use life or depreciation rate.
  • Physically verify property tag number, serial number, manufacturer/ model, location, description and condition code.
  • Follow-up visits as compulsory to verify any residual assets and gather additional information
  • Creation of audit trail to link the reconciled inventory file with the existing fixed asset accounting records.

Asset audit techniques for physical verification
Following are the main techniques for physical verification of asset audit:

  • Asset physical existence
    This technique is used for verifying assets physically exist or not. These assets could be any movable or immovable property.
  • Purchase asset for business
    It is verifying that asset is purchased for the company by the company. The aim of this technique is ‘verify & check the purchased assets’. It shall not be in the name of any employee.
  • Asset ownership
    This technique is used for identifying ownership of the asset. It must be in the name of the business, and it should not be on the lease. Deeds and purchase documents are also verified.
  • Correct asset evaluation
    This asset technique is used for calculating the correct asset value. Management estimates the value of assets, and the auditor verifies them by cross-checking documents, and the auditor verifies them by cross-checking records and physically inspecting assets.

In order to help the auditors manage quality audits and adhere to the audit compliance standards, ICAI has released guidelines advising auditors regarding conditions that may arise due to the Covid-19 pandemic and how they can carefully examine specific circumstances while undertaking audit assessment the risk accordingly.

At AJSH, we assist our clients in dealing with physical verification and reconciliation of assets, fixed asset management, inventory management, financial planning, operational support, statutory compliances etc., by providing them adequate support and guidance from our end. If you have any questions or wish to know more about the physical verification of fixed assets, kindly contact us.


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