Define the term verification and explain the procedure of verification

VERIFICATION :-
Verification means confirmation or proving the truth about the assets and liabilities appearing in the balance sheet.


PROCEDURE OF VERIFICATION :-
Following points are important in the procedure of verification :

1. Verify Assets Register :-
The assets register should be collected by the auditor from the company. It can be used to verify the sale and purchase assets. The entries in the register should be approved by officer of the company.

2. Schedule Of Assets :-
The auditor can collect the schedule if assets and can verify the various things like opening balance, addition and other information's relating to assets. The schedule must be signed by the officer.

3. Physical Verification :-
The auditor can go to that place and verify the asset where that is lying. Management helps the auditor for verification.

4. Verify The Custody :-
The custody of the assets can be verified by the auditor that these are the hands of relating incharge or not.

5. Addition Of Asset :-
The new assets purchase by the company must be recorded in the books of accounts. This addition must be verified by the auditor.

6. Disposal Of Assets :-
The auditor can verify the entry of asset which is sold during the year. It may be sold on profit or loss.

7. Transaction Approval :-
The auditor must verify that every transaction is made by the order of the competent authority or not. He should verify the signatures on every document.

8. Verify The Cost :-
The cost of asset should be verified by the auditor by checking the documents like vouchers and journal entries.

9. Verify The Internal Control :-
The auditor should verify that internal control system is applied or not. If it is applied then auditor should verify the effectiveness of this system.

10. Loan On Asset :-
The amount of loan taken against any asset as security must be verified by the auditor. It can be also verified from the lender.

11. Verify Disclosure :-
In case of disclosure auditor should verify that all disclosure requirements have been followed by the govt. laws or not.

12. Verify Title Deed :-
Auditor can verify the title deed to determine the real ownership of a business. In this regard various other papers like agreements and vouchers may be checked.

13. Verify Depreciation :-
The auditor can verify the depreciation amount of each asset re partly. The fixed asset depreciation is determined according to its working file.

14. External Verification :-
The auditor can verify the assets from lenders borrowers, banks and from the other parties related to the business.

15. Capital & Revenue :-
The auditor can distinguish the capital and revenue expenditure. The capital expenditure becomes the parts of asset with the revenue expenditure is transferred to profit and loss account.

16. Stock Valuation Certificate :-
It is duty of the management to provide this certificate. For the preparation of report the auditor may obtain this certificate from the officer incharge.

17. Verify Correspondence :-
The auditor can verify the correspondence made between the lawyers, borrowers and lenders. It is very useful for understanding the facts related to business activities.

18. Reply Of Management Raises :-
Auditor sometimes raises objection and asks to reply some questions in this regard. For the removal of these objections management submits its reply. This reply letter is very useful and becomes the past of the working paper.