Property, Plant and Equipment Audit Working Paper
(Following draft may be used as an example)
Background:
{{client_name}} holds property, plant and equipment used in the conduct of its operations. The asset register, depreciation policy and capitalisation thresholds are maintained by the finance team and reviewed by the engagement partner during planning.
Purpose:
To document audit work performed on the existence, completeness, accuracy, valuation, rights and presentation of Property, Plant and Equipment (PPE) recognised in the balance sheet of {{client_name}} as at {{period_end}}, in accordance with Ind AS 16 / AS 10 and the relevant Standards on Auditing.
Work Done:
1. Opening Balances and Roll-forward
- Agreed opening balances of gross block, accumulated depreciation and net block to the prior-year audited financial statements.
- Obtained the fixed asset register and reconciled the closing gross block, depreciation and net block to the trial balance.
- Verified the roll-forward: Opening NBV + Additions − Disposals/Adjustments − Depreciation = Closing NBV.
2. Additions
- Selected a sample of additions exceeding the materiality benchmark and the lower threshold for unusual items.
- Verified each selected addition against the purchase invoice, capitalised cost (including freight, installation and directly attributable costs), board / management approval and the asset's physical existence.
- Confirmed that borrowing costs, where capitalised, comply with Ind AS 23 / AS 16.
- Reviewed CWIP movement and capitalisation triggers to ensure assets put to use have been moved out of CWIP at the right date.
3. Disposals and Retirements
- Selected a sample of disposals; agreed sale consideration to bank statements and Form 26AS.
- Recomputed gain/loss on disposal: Sale consideration − (Cost − Accumulated Depreciation up to date of sale).
- Verified that the disposed asset has been removed from the fixed asset register and from the depreciation schedule.
4. Depreciation
- Verified the depreciation policy (useful life, method, residual value) against Schedule II of the Companies Act, 2013 and disclosure in accounting policies.
- Recomputed depreciation for a sample of asset classes and reconciled to the depreciation expense in the statement of profit and loss.
- For assets with useful lives differing from Schedule II, obtained the technical assessment justifying the alternate life.
5. Physical Verification
- Obtained the physical verification report carried out by management at reasonable intervals.
- Reviewed reconciliation of book records to physically verified quantities and inspected explanations for differences.
- For a high-value sample, performed our own physical inspection where access permitted.
6. Title Deeds and Rights
- For immovable properties (land and buildings), obtained the title deeds and verified the registered owner is the company.
- Where title deeds are not in the company's name, obtained an explanation and reviewed the disclosure in the financial statements as required by Schedule III.
- Confirmed compliance with CARO 2020 clause 3(i)(c) on title deeds disclosure.
7. Impairment Assessment
- Reviewed management's assessment of impairment indicators in line with Ind AS 36 / AS 28.
- For assets with indicators, obtained the recoverable amount calculation and tested key assumptions.
- Documented conclusion on impairment recognition or non-recognition.
8. Revaluation (if applicable)
- Where the company has revalued any class of assets, obtained the valuer's report and reviewed compliance with Ind AS 16.
- Verified the revaluation surplus / loss has been recognised in OCI and the revaluation reserve, as appropriate.
- Confirmed the disclosure under CARO 2020 clause 3(i)(d).
Variance Analysis
| Particulars | Previous Year (₹) | Current Year (₹) | Variance (%) | Remarks |
|---|
| Gross Block | | | | |
| Accumulated Depreciation | | | | |
| Net Block | | | | |
| Capital Work in Progress | | | | |
| Additions during the year | | | | |
| Disposals during the year | | | | |
| Depreciation expense | | | | |
Conclusion:
Based on the work performed, Property, Plant and Equipment as at {{period_end}} is recorded in accordance with Ind AS 16 / AS 10 and Schedule II of the Companies Act, 2013. CARO 2020 clauses 3(i)(a) to 3(i)(d) have been complied with and disclosed. No material misstatements were identified.
