VERIFICATION OF ASSETS AND LIABILITIES
In the conduct of the audit of an entity, the auditor is presented with audit
evidence and other information supporting the assertions, classes of transactions
and balances. The auditor checks the evidence and information presented in
the primary documents. The auditor checks the initiation, authorisation,
postings, amongst others. The auditor approaches his or her work with
professional scepticism. The auditor does not readily believe what he or she
has been presented with. This enables the auditor to identify errors which need
to be corrected to ensure early detection of any material misstatements in the
financial statements on which the auditor is providing an audit opinion.
The auditor uses verification principles to substantiate the evidence provided.
Verification principles include:
(a) Confirm authorisation;
(b) Checking existence;
(c) Confirmation of costs or value
(d) Confirmation of title
(e) Physical inspection
(f) Completeness check
(g) Presentation and disclosure.
Verification procedures in relation to assets and liabilities contained in a set of
financial statements rely heavily on the original transactions being accurately
recorded and appropriate distinction made between expenditure of capital
nature and revenue. Verification procedures also rely on the transactions being
properly authorised in line with the entity’s authorisation procedures.
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