Accounting & Book-keeping
Accounting is a vital element of any business as it provides the visibility to the financial transactions of the entity. It includes day to day recording of all the transactions of the business following the necessary rules applicable by interpreting, classifying, analysing, reporting, and summarizing the financial data. It helps businesses in tracking the income and expenses and thus it reflects the results of the operations. It plays a major role in the decision making part of any organization.
Accurate maintenance of books is crucial to both internal as well as external users which may include management, investors, financial institutions and government etc.
Fixed assets in an organization represent the long-term tangible assets which are used to produce and deliver its products or services, and to manage its operations.
Significant resources get invested in fixed assets, be it buildings, plant and equipment, Information Technology hardware or office interiors. Examination and confirmation that the assets physically exist, have not been impaired, and still continue to perform their intended functions forms an integral part of an entity's accounting for its assets.
Creating and maintaining a fixed asset register, and periodic physical verification of fixed assets become a critical function especially for asset-intensive entities. Failure to do this can lead to either overestimation or otherwise of the company's assets in its balance sheet.
Physical verification also becomes crucial when external auditors need some assurance that the assets included in the balance sheet do exist and an independent confirmation can assist in providing such assurance.
Inventories are tangible property held for sale in the ordinary course of business, or in the process of production for such sale, or for consumption in the production of goods or services for sale, including maintenance supplies, consumable stores and spare parts meant for replacement in the normal course.
Inventories normally comprise raw materials including components, work-in-process, finished goods including by-products, maintenance supplies, stores and spare parts, and loose tools.
Inventory Verification is the process of cross-checking financial records with physical inventory and records. It can be as simple as just taking a physical count of stock and inventory to verify a match to the accounting records but is crucial and an important aspect of gathering evidence, especially for manufacturing or retail-based businesses.It can represent a large balance of assets or capital.
Verification of Inventory not only involves the verification of the amount of inventory but also its quality and condition to see whether the value of the inventory is fairly represented in financial records and statements.