Audit of fixed assets

From January 1, 2022, RAS 6/01 is deemed invalid, and FAS 6/2020 (approved by the Order of the Ministry of Finance No. 204н dated 17/09/2020) will be mandatory for application instead. In this article we will consider how the audit of fixed assets is conducted according to the new legislation and what procedures it includes.

What is an audit of fixed assets

The audit of fixed assets includes the verification of operations connected with movement of fixed assets in order to assess the reliability of accounting records and compliance with rules. An important feature of the audit of fixed assets is the stock-taking of objects: full and random.

Purpose of the audit is to express opinion on reliability of accounting statements as regards the reflection of the fixed asset item and correct maintenance of accounts according to the law.

Procedures for carrying out the audit of fixed assets

When carrying out the FA audit, the auditors check:

Provisions of the company accounting policy regarding the FA recognition (availability of limits, lawfulness of accelerated depreciation, accounting of costs for repair of the fixed assets, depreciation accrual methods, FA not subject to depreciation etc.)
Compliance with criteria for recognition as a FA item
Availability of title documents to FА items
Correct reflection of the initial value
Execution of documents at all stages of FA movement
Correct accrual of depreciation, determination of terms and depreciation group
Results of revaluation of the fixed assets and their reflection in the balance sheet
Correctness of costs for repair of the fixed asset items
Correct reflection of modernization and reconstruction in accounts
Stock-taking. Verifying the availability of contracts on full financial responsibility with employees, checking the composition of the commission appointed by the manager.
Internal control system for the given section of accounting
Tax accounting of FA items

Application of FAS 6/2020 “Fixed Assets” from January 1, 2022

FAS 6/2020 “Fixed Assets” introduces many different concepts and provides organizations with the freedom of actions in certain situations.

Let’s consider the basic changes:

The items below the established limit are not recognized as fixed assets;
The residual value concept is introduced. It will be calculated based on two values: the amount, which the organization would have received in case of item retirement and suggested retirement costs;
The elements of depreciations are the useful life, residual value and depreciation accrual methods.
There is a new criterion for a fixed asset recognition – tangible physical form of an item;
And many others.

It should also be noted that in connection with application of new FAS 6/2020 “Fixed Assets”, the following changes will have to be introduced in accounting policy in 2022.