FIXED ASSET AUDIT REPORT OF
ESRI INDIA TECHNOLOGIES PVT LTD
Scope
1) Classification of assets and their useful life
2) FAR elements
3) P2P Process on sample basis
4) Opex into Capex or vice versa
5) Disposal of asset
6) Verification of cost of asset
7) Other control points
8) CARO Reporting
1) Classification of Assets and useful life
Observation
a. In the sheet attached herewith, the assets are not classified as per the Companies
Act, 2013 which results in the incorrect useful life of asset.
Impact
a. The depreciation on the asset is computed as per the useful life of asset and
useful life is determined on the basis of the classification of asset.
b. In the above cases, the useful life of electronic equipment is 36 months and office
equipment is 60 months as per the Act.
If the asset is classified as electronic equipment which results in the excess
depreciation in the current year which will ultimately decrease in the profit of the
company.
Suggestion
1
Auditee comment/Action points-
a. The company will classified the asset as per the companies act, 2013 from the next
financial year 2023-24 dated 01-April-2023.
2) FAR Elements
Observation
a. We have found that capitalisation date of asset in SAP is after the date at which
company claimed the depreciation on asset. The sheet is attached herewith.
b. In the sheet attached herewith, the assets are not assigned under any employee of
the company.
c. Approx. 800 assets of the company have nil value.
d. As per the companies Act, 2013- Depreciation shall be charged on the asset
excluding salvage value which is considered to be 5% of asset. But the company has
charged depreciation including salvage value till dated 31-mar-2022. The sheet
attached herewith.
Impact
a. As per the above observation point (a), it results in the excess depreciation on
asset which don’t show the clear image of the accounting estimate.
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b. As per the above observation point (b), it shows that the assets are not under
control of any authority.
c. As per the above observation point (c), it shows that assets a
d. As per the above observation point (d), it shows that the company has taken excess
depreciation which ultimately results in the decrease in the profit of the company
in previous years.
Suggestion
Auditee comment/Action points
a. The company has decided for the above point (a) i.e. it will take the same date in
SAP of both capitalisation date and depreciation date from next FY 2023-24 for
those whose invoice will come in the same month in which goods are received.
b. The company has decided for the above point (b) i.e. it will assigned the asset
under the appropriate authority.
c. The company has decided for the above point (c) i.e. it will discard the asset.
d. The company has decided for the above point (d) i.e. it will charge the depreciation
on the asset excluding the salvage value.
3) P2P Process on sample basis.
Observation
In the sheet attached herewith, the following points are observed-
a. The quotation not taken from the vendor.
b. PO made after the invoice received in two cases.
Impact
a. For the observation point (a), the
Suggestion
Auditee comment/Action points
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4) Opex into capex or vice versa
Observation
a. Assets value of Rs. 5600 is capitalised instead of charged into operating expenses.
FA code Classification as per Asset name Capitalisation Capitalised
SAP Date Amt
FA0261 Electronic Equipment Meraki AC power 19-09-2022 700.00
8 cord
FA0261 Electronic Equipment Meraki AC power 19-09-2022 700.00
9 cord
FA0262 Electronic Equipment Meraki AC power 19-09-2022 700.00
0 cord
FA0262 Electronic Equipment Meraki AC power 19-09-2022 700.00
1 cord
FA0263 Electronic Equipment Meraki AC power 19-09-2022 700.00
8 cord
FA0263 Electronic Equipment Meraki AC power 19-09-2022 700.00
9 cord
FA0264 Electronic Equipment Meraki AC power 31-10-2022 700.00
0 cord
FA0264 Electronic Equipment Meraki AC power 31-10-2022 700.00
1 cord
b. In the following cases, the company has charged the expense in Repair &
maintenance instead of capitalised the asset
Posting Remarks Offset Acc Debit/credit Document Comment
Date name No.
17-01- Repair & Innovent 374999 PU In this
2023 fixing spaces Pvt 31002742 Expenses of
charge ltd approx. 2
Bangalore lac is to be
capitalised.
19-01- Installation Ecomec 14500 PU It is to be
2023 of split AC Engineering 31002756 capitalised.
in server
room
Impact
a. For the observation point (a), the company can c
b. For the observation point (b), the company has claimed excess expenses which
result in the reduction of profit.
Suggestion
4
Auditee comment/Action points
The company has decided to rectify it from the next financial year 2023-24.
5) Disposal of Asset
Observation
The company sold the motor vehicles during the year. In this, we found that the sale
date in SAP and RC transfer document date of motor vehicle is not the same. Approx. 4
motor vehicles are not transferred even though the employee has been left the
company. The sheet attached herewith.
Impact
In the SAP, the motor vehicle is sold but still the company owns the asset. It represents
that the company sold the asset and booked the excess loss in SAP which results in the
reduction of profit.
Suggestion
Auditee comment/Action points
The company will transfer the RC.
6) Verification of cost of asset.
Scope- on sample basis
Less than 25000- 10% verified
Less than 1 lac & 25000- 25% verified
Less than 5 lac & > 1 lac- 40% verified
Greater than 5 lac- 100% verified
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Observation
We found that the company has appropriately recorded the asset in SAP as per
invoice and in all the invoices which are verified, it is made in the name of the
company, GST number is mentioned, proper description of the particular item
and the all bills are properly authenticated by the concerned authority.
Impact
It shows that the company has a good internal control regarding the recording
the asset.
7) Other control points
Observation
a. We found that as per the vehicle policy of the company (policy attached herewith),
the vehicle is registered in the name of the company and the employee who has
received the car from the company can do repair & maintenance expenses on the car
up to certain amount.
While checking the invoices of repair & maintenance of motor vehicle, it is made in
the name of employee instead of company name.
b. While reviewing the vehicle policy and discussion with the management, we found
that the money the company is taking in exchange of car from the employee is in the
form of EMI (principal + interest). So, the interest should be shown in other income
but it is not showing in the financial statements.
c. Laptop warranty
Impact
a. For the observation point (a) - As per the inherent limitation of internal control,
we are not able to verify that the repair & maintenance expense on the vehicle is
of the same vehicle which is registered in the name of the company or other
vehicle.
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b. For the observation point (b) - The Company has shown the less income which
results in the incorrect profit of the company.
Suggestion
Auditee comment/Action points
