Accounting Standard (AS) 10- Accounting for Fixed Assets issued by ICAI
Accounting Standard (AS) 10, “Accounting for Fixed Assets” defines “fixed asset” as an “asset held with the intention of being used for the purpose of producing or providing goods or services and is not held for sale in the normal course of business”.
Company Auditor’s Report Order,2020 (CARO)
(a) (A) Whether the company is maintaining proper records showing full particulars, including quantitative details and situation of Property, Plant and Equipment. The Order is silent as to what constitutes ‘proper records’. In general, however, the records relating to fixed assets should contain, inter alia, the following details:
(B) Whether the company is maintaining proper records showing full particulars of intangible assets.
Intangible Assets Includes
4. Software’s and Applications
|Intangible Asset||Verification Procedure|
|Goodwill||Particulars of expenses debited to Goodwill account.|
|Patent||Examine the actual certificates issued by the patent office in respect of patents granted. Ensure that patents are registered in the name of the client.
Obtain a list showing the description of each patent, registered number, date, patented item, renewal date and number of years to run etc., concerning each patent.
Where patents have been purchased from an individual, auditor should inspect the agreement for the purchase and note the age of various patents.
|Copyrights||Vouch the expenditure incurred in connection with their acquisition like registration fees, payments made to designer and artist, expenditure on account of salaries and overheads, attributable to the time spent in developing designs of trademark should be capitalised for arriving exact value of trademarks.
If the trademark has been acquired by assignment, vouch the amount paid for that with the assignment should be capitalised.
|Software’s and Applications||In case of customised Software and Application- Vouch all the expenses incurred.
In case of purchase check the agreement and purchased bill.
Check the expiry period, version, and usage. Sometimes on change of technology some software got obsoleted and hence need to be write-off from books.
(b) All the Property, Plant and Equipment have been physically verified by the management during the year and there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. No material discrepancies were noticed on such verification.
This clause is for the tangible assets of the company. To ensure the availability of assets, assets should be physical verified periodically.
(c) All the title deeds of immovable properties are held in the name of the company.
(d) The Company has not revalued its property, plant and equipment (including right of use of assets) or intangible asset of both during the financial year;
(e) There is no any proceeding have been initiated or pending against company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.