Learn how auditors should effectively verify MOTOR VEHICLES expenses to ensure accurate financial reporting and compliance.
As an auditor, verifying MOTOR VEHICLES expenses is crucial to ensuring the accuracy of financial statements and compliance with regulations. In this article, we will discuss the best practices auditors should follow when examining MOTOR VEHICLES expenses to detect any potential fraud or errors.
How Auditor Should Verify MOTOR VEHICLES Expenses
The auditor should verify the motor vehicles in following ways:-
PHYSICAL EXISTENCE
The auditor may examine the physical existence of assets. He must check the registration number of motor vehicle with the assets registers and purchase documents.
CORRECT VALUATION
The auditor may examine that its value is properly made as per requirement of companies ordinance 1984. After adding the capital expenditures and deducting the disposals and accumulated depreciation, we will find the net value of the asset.
VALID OWNERSHIP
The auditor must verify that motor vehicles are registered in the name of business. The registration in any other name is not acceptable at all.
DEPRECIATION
The auditor should see that motor vehicles are properly depreciated. The appropriate rate of depreciation as per requirement of International Standards on Auditing is 15%.
AUTHORIZATION
The motor vehicles must be bought or sold by the authorized person. The auditor can verify the authorization through study of directors minutes book.
DISCLOSURE
The auditor can verify that motor vehicles are disclosed according to the requirements of companies ordinance 1984. In the Balance Sheet the motor vehicles are written under the head of Fixed Assets.
Conclusion
In conclusion, verifying MOTOR VEHICLES expenses is a critical aspect of the auditing process that ensures the accuracy and reliability of financial statements. By following the best practices outlined in this article, auditors can effectively detect any potential fraud or errors related to MOTOR VEHICLES expenses and provide assurance to stakeholders that the financial statements are fairly presented