How Does An Auditor Inspect The Motor Vehicle And Tool Asset Of A Business Company?

How Does An Auditor Inspect The Motor Vehicle And Tool Asset Of A Business Company?

Almost all the service-oriented business companies have to deliver their products on time and so requires transportation facilities for doing so. In fact, an Auditor has to examine if the vehicles owned for this purpose and its expenses are represented fairly.

  • An Auditor evaluates motor vehicles with respect to the mileage or fuel usage method. This is accounted for a year and the proportionate cost for the asset is calculated for the mileage traveled.
  • Moreover, if the company owns more than a fixed number of motor vehicles, then it is advisable that they keep a vehicle register where all the details regarding the car must be written down. Or else, if such a register is lacking, then the initial balance sheet should bear the Motor Car account details like the registration number and rate of each vehicle.
  • The registration booklet must be verified by the Auditor and should see that the info complies with the details given by the client. Make sure no charges are made on these automobiles.
  • In addition, there exist a system of vehicle lending based on the loan provided by the company. An Auditor has to ensure if all such relevant details have been truly recorded and the vehicle title is duly transferred to its owner once all the payments are made.
  • There are also situations like the employers actually own the cars but the maintenance cost is managed by the company or the client and proper records should be maintained on this basis. It forms the duty of the Auditor to check with these records and also, reviews if a depreciation sum is fairly provided by the client.
  • During the cases like disposal or selling off the car as a scrap to the staff members, the Auditor must recognize the scrap value noted down in the record book and compare it with the actually realized scrap value. Further, he must also ensure if this balance is charged to the respective revenue account.

Similar to this condition, valuation of loose tools owned by the business company is also recommended. However, there are some items that have a particular duration of usefulness. On this account, there is no need to keep an individual account for these items. The Auditor only requires to view if proper supervision is practiced over these assets as there can be chances of fraud plays over these small assets.