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Sonal Rane asked 1 year ago

Sir, if i want to check ownership of fixed assets & i have 2 options: inspect registration document of properties or second option is review insurance documents. Why first option is correct (as per icai) third party confirmation is always more reliable no?like insurance company will show true the name of owner  

1 Answers
RaviRavi Staff answered 1 year ago

You are the audit manager of Ranker & Co are responsible for the audit work to be managed for the fixed assets of the company. Ranker & Co has 5 properties amounting to Rs.11.5 crore. One of the important tasks ahead for you is to confirm the ownership of these properties.

Which of the following would provide the most persuasive evidence of the ownership?
(a) To conduct a physical inspection of all the properties located at different areas.
(b) To ask the management registration documents of these properties and inspect and verify them.
(c) To check whether all the properties are recorded properly in the fixed asset register and depreciation has been calculated correctly.
(d) Enquire with the management if these properties are insured and review the insurance documentation

RaviRavi Staff replied 1 year ago

Further ICAI has given “b” as correct answer

RaviRavi Staff replied 1 year ago

We have to check ownership.

Best evidence is to inspect original ownership documents. Getting insurance doesn’t prove anyone is owner. Insurance company doesn’t examine ownership in-depth, they see value and quote premium, once they get it they are more than happy, they are not bothered weather documents are fake, whether dispute is going on etc

They will never give you confirmation of ownership, they will simply confirm they have issued insurance policy.

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