March is a very hectic month for the organization as this is the end month of a financial year. The account team got lots of work in their hand. If the balance sheet and worth value does not match then the audit is performed.
What is Asset Auditing?
The auditing is the procedure where inspection is done of assets. In asset auditing procedure, an organization provides a complete list of assets to the asset auditor then the auditor checks assets every one of them & physically verifies them. To check the authentication their documents are also cross-checked furthermore condition of each asset is also verified.
After examination of each asset, the auditor sees if the asset list matching or not! The examiner evaluates the overall worth value of assets.
What is the objective of asset auditing? How audit is beneficial for business?
The objective of asset auditing! Audit is beneficial for businesses! Both are similar to each other & have same answer.
Prevent fraud or theft – Asset theft is common in organizations. Assets come in small, medium & big sizes and some of these assets can be stolen easily when security is low and no proper documentation is done. Small assets are small in size but very precious to the company. One will never know when a theft occurred.
Now if you have represented this small asset in your account books then you will have to remove the record of the data from books in the right way. Otherwise, it will be a misrepresentation of assets and overestimating the value of assets which will be considered as a fraud in an audit.
Overstating & understating value – The purchase department employee might end up paying for an asset that does not even exist. In some cases, the asset is sold for higher value but in books, it is mentioned at low cost these types of scenarios have also occurred. Similarly, assets are sold at a low price but mentioned at a high price to increase the overall of the organization.
Manipulating Asset depreciation – Sometimes organization misuses document and increases asset life so that depreciation can be used for minimizing payable tax. Asset life is also increased for increasing the worth value so that financial position does not seem weak. When asset life has increased the retirement of assets is also carried forward.
According to the website, “Financial statement fraud is the most costly form of occupational fraud, causing a median loss of $1,000,000;”
The audit is done to keep the transparency, everything should be clear as water. It helps investors in making a decision either to invest in the organization or not.
Who does the auditing? What are the roles and responsibilities?
An audit is done by the auditor and one of the main responsibilities is to secure assets by ensuring that the organization compliance with rules, regulations as per the business sector standard. Other than this verifying assets with documents and conditions of each asset. After that creating a detailed report about the organization. Maintaining internal control & suggesting new policies.
Overall, the work of the auditor is to cross-checking & verifying the documents, assets, and financial statements of the organization and creating a detailed report about the organization.
Auditor directly reports to the management and auditor is highly skilled, experienced.
What are the types of asset audit?
There are two types of asset audit first is an internal audit & the second is an external audit.
Internal audit – Internal audit prepares the organization for the external audit. In this internal audit process, auditors are employed by the organizations. They assist organizations by revealing issues and making everything in order so that when the external audit is done everything is organized. The internal auditors need to make sure that the organization complies with rules and regulations.
External audit – When an organization going public then an external audit is a necessity to make sure that all records are clean and transparent. Financial audits aim to determine whether the financial statements contain any material errors. An unqualified, or clean, auditor’s opinion gives consumers of financial statements confidence that both correct and full are financial. Therefore, external audits have allowed stakeholders to make better-informed decisions about the business being audited.
What are the stages of Audit?
There are mainly four stages of audit procedure:
- Audit planning – In this stage, all the planning and how the audit will be performed is decided such as understanding the client’s objective, the main auditor, when the audit will be performed & all the paperwork is done related to the audit.
- Audit execution – This stage is also known as fieldwork. All the data is collected in this stage. Verification of assets and documents is also done. It is verified that organization is complying with policies and law.
- Audit reporting – After conducting an audit, a report is created which have all the detail. The result of the investigation is mentioned in this report. If an audit is internal then issues are identified and informed to the top management. If an audit is external and the organization has not complied then the organization is penalized.
Conclusion
We know audit is not a simple process, on the contrary, is a long and time-consuming process. However, asset management software can help you comply with rules and regulations. It can also keep track of assets avoiding theft and helpful in the physical verification of assets. Undoubtedly, this software has the potential to grow your business.
Author details:
Author Name: Nishtha Kumari
Author Bio: Nishtha Kumari is the content specialist as well as digital marketer. She writes up well-researched content over the latest technology trends for various industries. Her priority is to cover up new technologies in the industry of asset management and tracking. New technologies like asset verification, depreciation tracking software, inventory management software, Utility management, facility management, asset tracking technologies, remote monitoring, maintenance management software, asset audit software, purchasing requisition software and many more.