# Audit Procedures for PPE
PPE is typically a material balance and a long-lived asset — errors compound over years. The auditor covers four assertions.
## 1. Existence
- Review the entity's physical verification plan for PPE.
- Look for evidence of appropriate supervision of the verification.
- Obtain the PPE physical verification report and:
- Assess if all items are properly tagged and bear identification marks.
- Reconcile items physically verified with the Fixed Asset Register (FAR).
- Verify discrepancies noted.
## 2. Completeness
- Verify the movement schedule: Opening Balance + Additions − Deletions = Closing Balance.
- Check arithmetical accuracy of the movement schedule.
- For all material additions, verify the expenditure meets the PPE recognition criteria (future economic benefits + reliable measurement).
- Items like spare parts, stand-by equipment, servicing equipment are recognised as PPE only when they meet the definition.
- Test the purchase invoice and installation certificate to verify date of addition.
- Verify additions are approved by authorised personnel.
- Verify internal processes (e.g., tender process) were followed.
- For deletions, understand reason, rationale, and manner of disposal from management.
## 3. Valuation
- Verify entity has charged depreciation on all items of PPE.
- Assess that the depreciation method reflects the pattern in which the asset's future economic benefits are expected to be consumed.
- Verify whether management has performed an impairment assessment (per AS 28 / Ind AS 36).
## 4. Rights & Obligations
- Verify all PPE purchase invoices are in the name of the entity — not directors, group companies, or related parties.
- For additions to land and building, check the sale deed to verify legal ownership.
- Insist on and verify original title deeds for all immoveable properties.
- For immoveable property given as security for borrowings, request management to obtain confirmation from lenders that they hold the original title deeds.
- Verify the register of charges.
## 5. Disclosure — Title Deeds Not Held in Co.'s Name
Where title deeds are not in the company's name, this table must be disclosed:
| Relevant B/S line item | Description of property | Gross carrying value | Title deeds in name of | Whether holder is promoter/director/relative/employee | Property held since (date) | Reason for not being held in name of Co. (also indicate if in dispute) |
|---|---|---|---|---|---|---|
| PPE — Land/Building | ||||||
| Investment Property — Land/Building | ||||||
| Others |