An auditor has to verify the following documents while auditing Sale of fixed assets.
1. Fixed asset register.
2. Sale Agreement.
3. Statement of accounts from Auctioneers.
4. Brokers’ sold note.
5. Correspondence (if any)
6. Directors’ minutes book in the case of a company.
Role of an Auditor in vouching sale of fixed assets
In the case of companies, the sale of fixed assets should be approved by the board of directors.Therefore, the auditors should verify the minutes of meeting of the Board of Directors.
The auditor should verify the cash book, the entries relating to sale of fixed assets and also the bank book to ensure that the amount received on the sale of fixed assets is immediately deposited in bank on the next day. He should also verify the calculation of profit/loss in sale of assets. He should ensure that the profit on sale is transferred to capital reserve.
Vouching Royalties Received
An auditor has to verify the following documents while auditing royalties received.
1. The contract of Royalty.
2. The periodical statement received from the lessee.
3. The statement showing the calculation of royalty to be received, short-workings, recoupment of short workings, penalties, etc.
Role of an Auditor in vouching royalties received
1. The information about the due date of royalty to be received, rate of royalty, etc., can be obtained from the contract of Royalty.
2. He shall verify earlier royalty receipts, and confirm the calculation of recoupment of short-working.
3. He shall ensure that the royalty shown as outstanding is appropriate and it is confirmed by the assessee.
4. He shall vouch the actual royalty received during the year with the copy of the cash receipt issued to the lessees.
5. Ensure that the Royalty receivable/ received during the year is, credited to the profit and loss account.
6. The auditor should verify the ledger account relating to Royalty receipts and confirm the balance with lessees.
7. Royalties of the past years should be compared and analyzed by the auditor to find the reasons for the variances, if any.