Tangible non-current assets are assets that are controlled by an entity and from which economic benefits are expected to flow to an entity for more than one accounting period. Examples of tangible non-current assets are plant, property, and equipment.
Entities buy non-currents assets to support its day to day activities and sometimes after the assets have been used for a long time or broken down or if the entity wants to get some cash the entity may decide to sell or dispose of the assets.
Usually, tangible non-current assets are material to the entity and the auditor should ensure that he performs the substantive procedures to verify assertion related to its tangible non-current asset including its disposal.
The following are some substantive procedures which auditor can perform to verify the disposal of tangible non-current assets.
- Obtain a list of all fixed assets disposed of during the period and agree with fixed asset’s schedule and fixed asset register (completeness and accuracy)
- Check authorization of disposal of fixed assets
- Check that cost and accumulated depreciation has been removed from books of accounts.