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Understanding the ins and outs of the physical verification of fixed assets can be daunting for many businesses. It’s essential to have a good understanding of the process to ensure that assets are appropriately accounted for, tracked, and reported.
In this blog post, we’ll look at what physical verification of fixed assets entails and how business advisory firms in India can help with the process. We’ll also discuss the potential benefits of physical verification and how it can help to improve accuracy and reduce fraud.
What is physical verification?
Physical verification is a process where an independent third party, usually a professional Business Advisory Services, examines and verifies the existence, accuracy, and condition of a company’s physical assets.
It is a form of due diligence to ensure accurate records are maintained and identify potential risks or noncompliance with regulations. Physical verification is essential for fixed assets, such as buildings, machinery, and other valuable items.
Why is it important?
The existence and proper accounting of the purchases listed in the financial statements have been ensured by physical verification of fixed assets. It also helps to detect fraud or unrecorded assets, undervaluation, misclassification, or other errors in the recorded data.
Furthermore, physical verification confirms that all required insurance policies and compliance regulations are being met. Finally, it ensures that the entity can produce all fixed assets when needed.
What does the process entail?
The physical verification process entails an advisor visiting the asset site and performing a comprehensive review of the assets present. The advisor will look for discrepancies, such as missing items or incorrect documentation, and compare them to the current ledger. It is done to ensure the records’ accuracy and that the assets are accounted for.
The advisor will also perform a visual inspection of the assets to assess their condition, make recommendations for repairs, and note any further necessary maintenance.
What are the benefits?
- Physical verification of fixed assets helps ensure accuracy and compliance with regulatory requirements.
- Additionally, fraud risk is decreased and assures that asset records are up to date.
- It can help protect the company’s financial stability and provide visibility into future planning.
- Lastly, it helps promote good stewardship of assets and proper use of funds.
How to consult business advisory firms
It is best to consult an experienced business advisory firm in India to ensure accurate physical verification of your fixed assets. They can assist you in developing an effective process for conducting these checks and guide you through the process step-by-step.
Their expertise can help you improve your records’ accuracy and ensure that all assets are identified and accounted for properly.