Position of an Auditor as regards Valuation of the Asset.

It is the duty of the auditor not only to verify the physical existence and ownership of the asset, but also its valuation as shown in the Balance Sheet. He should not only check the arithmetical accuracy of the assets appearing in the Balance Sheet but should also make inquiries through information and explanation to know the correct state of affairs.

The auditor has to be very careful and cautious while examining the valuation of various assets especially the current assets such as inventory, bills receivable, accounts receivable etc. As far as fixed assets are concerned, the same are valued on the basis of their historical costs less proper amount of depreciation.

An auditor may rely on the directors of the company or on the certificates of other professional in respect of valuation of the assets, provided he uses reasonable care and skill. In matters relating to valuation of assets the auditor must adhere to the generally accepted principles of valuation, commercial practices and accounting standards.

The auditor should ensure that adequate depreciation has been charged on assets before determining the current value. The auditor should state the basis of valuation of assets in the Balance Sheet as certified by the directors or engineers, architect etc. as the case may be.

Tags: B.Com

Enable registration in settings - general
Compare items
  • Total (0)