What auditors actually look for in your fixed asset register

A fixed asset register is a simple document that goes wrong in predictable ways. Of the queries we raise in a typical first-year audit, a disproportionate number trace back to this one schedule — not because the numbers are wrong, but because the register cannot demonstrate that they are right.

Here is what we test, and what you can check yourself first.

1. Does the register reconcile to the ledger?

Start here, because nothing else matters if this fails. Cost and accumulated depreciation per the register must agree to the trial balance, line by line, by class. A difference of any size needs explaining, and "rounding" is not an explanation at the class level.

2. Are additions supported?

For each addition above your testing threshold we expect an invoice, evidence of payment, and evidence that the asset exists. The third is the one most often missing. A capitalised cost with no asset behind it is the classic route to an overstated balance sheet.

3. Is the capitalisation boundary applied consistently?

Your policy sets a threshold. The register should show no items below it, and the repairs account should show no items above it that look like assets. Both directions of error occur, and the second is more common: a replacement engine expensed because it arrived on a maintenance invoice.

4. Do the useful lives still make sense?

Lives set at acquisition are rarely revisited. We look for assets fully depreciated but still in use — which suggests lives are too short — and assets carrying substantial value well past their practical life, which suggests the opposite. Neither is fatal; both need a considered answer.

5. Have disposals been removed?

Both cost and accumulated depreciation. A disposal that removes only the cost leaves a credit balance in accumulated depreciation that persists for years and quietly understates the depreciation charge.

6. Can someone walk you to the assets?

We will select items and ask to see them. Where assets are at multiple sites, the register needs a location field that is maintained. Where they are with employees — laptops, phones, vehicles — it needs a custodian field.

Before we arrive

Run the reconciliation in point one and resolve any difference. Pull the supporting file for your ten largest additions. Walk your own register for a sample of items and confirm you can find them.

An afternoon of this work saves several days of queries, and it changes the tone of the audit from investigation to confirmation.