Unit 6

Financial Systems and Auditing

Unit 6

Verification and Valuation of

Assets and Liabilities

6.0 Verification and Valuation of Assets and Liabilities

6.1 Verification and Valuation of Assets
6.2 Verification of Liabilities
Learning Objectives
After reading this unit, you should be able to understand

The meaning of valuation and verification of Assets.

The method of verifying different types of assets and liabilities. -A-4h

6.1 Verification of Assets

The verification of assets implies an enquiry into the value, ownership and title,
existence and possession, the presence of any charge on the assets. Thus,
verification means to prove the truth about and the correctness and authenticity
of assets and liabilities.
The auditor has to perform 4 types of functions in verifying the assets:
1. To see that they are clearly stated in the balance sheet.
2. To ensure that they are in existence on the day of the Balance Sheet.
3. To verify that they are the property of the business and as such, they are free
from any charge or mortgage.
4. To satisfy himself that they are properly valued. Valuation: Means
to test the exact value of an asset on the basis of its utility.
The following are some of the interpretations of the valve used in the valuation of
assets:
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