What your auditor will ask for on fixed assets, and how to have it ready

Start from the auditor's questions

A list of documents is only useful if you know why each one is asked for. Statutory auditors plan their work on property, plant and equipment around a small set of questions, often described as assertions:

• Existence. Do the assets in the register physically exist?
• Completeness. Is every asset the company owns or controls in the register, and has every addition been recorded?
• Rights. Does the company own the assets, or have the right to use them, and are the title deeds in its name?
• Valuation. Are cost, depreciation, impairment and disposals measured correctly under Schedule II and the applicable standards (Ind AS 16 or AS 10)?
• Presentation. Are the Schedule III note, CWIP ageing and the accounting policies disclosed correctly?

On top of that, the auditor reports separately on fixed assets under CARO 2020 clause 3(i), and, for companies using accounting software, on the audit trail under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014.

The list below is organised around those questions. It complements the year-end closing checklist, which is about doing the work; this article is about showing it. The free fixed asset audit checklist follows the same structure if you want a printable version.

1. The register and its roll-forward

Everything starts here. The auditor will want:

• The fixed asset register as at the balance sheet date, with every asset's code, description, category, location, cost, accumulated depreciation and net book value
• A roll-forward by class, opening to closing, showing additions, disposals, transfers, depreciation and impairment, that agrees with the Schedule III note
• A reconciliation of the register to the trial balance for cost, accumulated depreciation and the depreciation charge, with every reconciling item explained

If the register does not agree with the ledger, fix that before the audit starts. An unexplained difference makes every later test harder, because the auditor cannot be sure which population is being tested.

CARO 2020 clause 3(i)(a) asks whether the company maintains proper records showing full particulars, including quantitative details and situation, of property, plant and equipment, and proper records of intangible assets. The register is the evidence for that answer, so make sure quantity and location columns are filled for every row.

2. Additions

For a sample of additions, expect to provide:

• The approved capital expenditure request or board approval, where your delegation of authority requires one
• Purchase order, goods receipt and vendor invoice
• Evidence of the put-to-use date: an installation or commissioning report, a handover note, or for IT equipment the date the device was issued
• The working for any directly attributable costs added to cost (freight, installation, professional fees, borrowing costs)
• GST treatment: whether input tax credit was taken, and confirmation that the tax was kept out of cost where it was

The put-to-use date is often the weakest link. Depreciation in the books starts when the asset is available for use, and the half-rate test for tax depends on the date of first use, so the auditor will want a document, not a memory.

Auditors also test completeness from the other direction: they look through the repairs and maintenance ledger and capital-looking expense accounts for items that should have been capitalised. Have an explanation ready for large repairs.

3. Capital work-in-progress

• A project-wise CWIP schedule with opening balance, additions, capitalisation and closing balance
• The ageing in the Schedule III buckets, and the completion schedule for projects that are overdue or over their original cost
• For each project capitalised in the year, the evidence that the asset was ready for use on the date chosen
• Any amounts written off or expensed out of CWIP, with the reason

The CWIP article covers how to prepare these.

4. Disposals and write-offs

• A list of disposals with approval, sale invoice, buyer, proceeds and the gain or loss calculation
• For scrapped, lost or stolen assets, the write-off approval, police report or insurance claim where relevant
• GST charged on sale of capital goods, and the comparison with the reversal required under section 18(6) of the CGST Act
• Confirmation that the assets disposed of have been removed from the register, and that depreciation stopped on the disposal date

5. Depreciation

• The depreciation policy for each class: method, useful life, residual value
• For any life or residual value that differs from Part C of Schedule II, the technical advice that supports it, since Schedule II requires the difference and the justification to be disclosed
• The depreciation run or register for the year, with enough detail for the auditor to recompute a sample
• Evidence of the annual review of useful lives, residual values and methods required by Ind AS 16 or AS 10, and the treatment of any change as a change in estimate

The Schedule II calculator is a quick way to check your own sample before the auditor does.

6. Physical verification

CARO 2020 clause 3(i)(b) asks whether property, plant and equipment have been physically verified by the management at reasonable intervals, whether any material discrepancies were noticed, and whether they have been properly dealt with in the books. The auditor will ask for:

• The verification programme and the period it covers
• Count sheets or scan results, signed by the teams
• The reconciliation of the count to the register, with each discrepancy and how it was resolved
• The management sign-off

The CARO 2020 guide explains what "reasonable intervals" and "properly dealt with" mean in practice.

7. Title, revaluation and benami

• Title deeds of immovable property, or certified copies where the originals are with a lender, for clause 3(i)(c). Where a deed is not in the company's name, the details Schedule III requires in the notes
• Valuation reports for any revaluation, and confirmation that the valuer is a registered valuer, for clause 3(i)(d)
• A management representation on whether any proceedings have been initiated or are pending under the Benami Transactions (Prohibition) Act, 1988 (as CARO 2020 refers to it) and the rules made under it, for clause 3(i)(e)

8. Impairment, leases and commitments

• Management's assessment of impairment indicators at the reporting date, and the impairment test where an indicator exists. See impairment indicators
• For Ind AS companies, the right-of-use asset schedule under Ind AS 116
• Capital commitments: contracts remaining to be executed on capital account and not provided for
• Insurance schedules, which the auditor may compare with asset values and locations

9. Tax depreciation and deferred tax

• The block-wise Income-tax depreciation schedule and, where a tax audit applies, the figures for clause 18 of Form 3CD
• The deferred tax working on the difference between book and tax written-down values

The book vs tax reconciliation guide shows the layout.

10. The audit trail

For companies using accounting software, the auditor reports under Rule 11(g) on whether that software had an audit trail feature that operated throughout the year and was not tampered with. If your fixed asset system computes depreciation that is posted to the books, expect questions about its audit trail too. The audit trail article explains the rule.

Making the list easier next year

Most of the effort in a fixed asset audit goes into finding documents that already exist somewhere. Attaching the invoice, the commissioning note and the approval to the asset record when it is created, rather than in March, removes most of it.

In FixedAsset Pro, documents, photos, verification results and approvals sit in an evidence vault per asset, the audit cockpit shows verified, missing, duplicate and missing-document counts, and the report centre includes the depreciation register, Schedule III schedule, CARO 3(i)(b) statement and audit trail export. Duplicate records and assets without documents can also be found by the AI checks before the auditor finds them. These give the auditor evidence; they do not replace the auditor's judgement.

This article is general information as at October 2026. The auditor decides the nature and extent of testing; agree the list and the timetable with your audit team at the planning stage.