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Stock Audit · The Classic Partners LLP

Fixed Asset Audit & Verification

Q: What is a ghost asset and why does it matter?

A ghost asset appears on your Fixed Asset Register but cannot be physically located — lost, stolen, scrapped or transferred without a FAR update. Ghost assets overstate gross block, inflate depreciation and distort insurance sums insured.

Q: How often should fixed assets be physically verified?

CARO 2020 requires verification at reasonable intervals — at least once every three years for most companies, and annually for businesses with significant capex, multiple locations or lender reporting obligations.

Physical tagging, verification and Fixed Asset Register reconciliation for plant, machinery, IT equipment and property — structured to satisfy CARO 2020, lender term-loan conditions and insurance renewal requirements, with a signed verification certificate.

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Quick answer

A fixed asset audit involves the physical verification of every tangible asset — plant, machinery, vehicles, furniture, IT equipment and property improvements — followed by unique asset tagging, reconciliation with your Fixed Asset Register (FAR), identification of ghost assets and unrecorded additions, and a signed verification certificate. It is required under CARO 2020 Para 1 for statutory audit purposes, demanded by lenders before term loan disbursement, and essential before a financial due diligence, insurance renewal or change of management. The Classic Partners LLP handles full-cycle fixed asset audits — physical survey, barcode tagging, FAR reconciliation, depreciation review and insurance-valuation support.

What we do

A clean, tagged and reconciled Fixed Asset Register — verified and signed

Most businesses accumulate a Fixed Asset Register that drifts further from physical reality with every year of additions, disposals and transfers. Assets get scrapped without being written off. New equipment gets capitalised under the wrong head. Laptops change hands without being reassigned. By the time a lender or due diligence team asks for a verified FAR, the gaps are embarrassing.

We conduct a floor-by-floor, rack-by-rack physical verification, affix unique barcode or QR asset tags, match every physical asset to a FAR line, identify ghost assets and unrecorded additions, and rebuild the FAR where required — delivering a clean, signed verification certificate and a reconciled register your auditor, lender and insurer will accept.

Covers plant & machinery, IT, vehicles, furniture and leasehold improvements
Unique barcode / QR tags affixed — linked to asset codes in your FAR
Ghost asset identification — assets on FAR but not physically traceable
Unrecorded additions — physical assets not yet on the FAR
CARO 2020 Para 1 compliance — PPE verification for statutory audit
Signed certificate acceptable to lenders and insurance surveyors

Who needs it

When a fixed asset audit is required or strongly recommended

Statutory, lender, insurance and business-event triggers that make an independent fixed asset verification necessary.

Trigger	Requirement	Who it affects
CARO 2020 Para 1	Statutory auditor must report whether property, plant & equipment (PPE) were physically verified at reasonable intervals and whether material discrepancies were dealt with in the books	All CARO-applicable companies
Term loan disbursement	Bank requires verified asset list and FAR submission as a sanction condition — particularly for equipment finance and project loans	Companies with secured term loans
Fire / property insurance renewal	Current replacement value of assets required for fire, machinery breakdown and consequential loss policies	All businesses with insurable fixed assets
Mergers, acquisitions & due diligence	Clean, verified FAR required for completion accounts, net asset calculations and purchase price adjustments	Target companies in M&A transactions
Change of management or ownership	Asset handover reconciliation — confirm what is being transferred and at what written-down value	Any business change of hands
GST ITC reconciliation	Capital goods ITC credit claimed must be supported by physical verification of the asset still in use	GST-registered businesses with capital goods ITC

Scope of work

What our fixed asset audit covers

Every engagement is scoped to your locations, asset categories and audit or lender requirements.

Physical Tagging

Unique barcode or QR asset tags affixed to every verified asset — location recorded, photo taken, asset code linked to your FAR. Tags are tamper-evident and scannable for future cycle counts.

FAR Reconciliation

Physical assets matched line-by-line to your Fixed Asset Register. Ghost assets (on FAR, not found physically) and unrecorded additions (found physically, not on FAR) clearly identified and reported.

Depreciation Review

Useful life, depreciation method and residual value checked against Schedule II of the Companies Act or Ind AS 16 — mismatches flagged for management correction.

Additions & Disposal Verification

Capital expenditure vs revenue expenditure classification reviewed; assets written-off or scrapped without FAR update identified; disposal proceeds and gain/loss treatment verified.

CARO 2020 Para 1 Compliance

Verification documentation structured to satisfy the statutory auditor's CARO 2020 PPE reporting requirement — discrepancy statement, materiality assessment and management's response.

Insurance Valuation Support

Current replacement value schedule prepared for each asset category — supports fire, machinery breakdown and ALOP policy renewal and ensures you are neither under- nor over-insured.

How we work

Our four-stage fixed asset audit process

Planned around your production schedule and access constraints — typically completed with minimal operational disruption.

Planning & FAR extract

Map departments, floors and locations; request FAR export from your ERP or Tally; prepare tagging materials; confirm access schedule with your facilities team.

Physical survey & tagging

Floor-by-floor verification, unique tag affixed to each asset, photo documentation with location, asset condition noted — every asset logged before moving to the next zone.

FAR reconciliation

Physical log matched to FAR — ghost assets, unrecorded additions, wrong location and wrong description all flagged with supporting photo evidence and monetary impact.

Certificate & management report

Signed verification certificate issued; management report with reconciled FAR, discrepancy schedule, depreciation realignment recommendations and a corrective action log.

Why The Classic Partners

A fixed asset audit that satisfies your auditor, lender and insurer

CA-signed, tagged and reconciled — with a clean FAR your team can maintain going forward.

CARO 2020 structured

PPE verification documentation designed to satisfy the statutory auditor's CARO Para 1 requirement — no additional work needed at year-end.

Barcode / QR tagging

Durable, tamper-evident tags with unique asset codes — scannable for future internal cycle counts without re-engaging a third party each time.

Multi-site coverage

Factory, office, warehouse, site office and leased premises all covered in a single engagement — one report, one certificate, one fee.

ERP-agnostic

Tally, SAP, Zoho Books, QuickBooks, Oracle and custom asset management systems all supported — we work with your existing FAR format.

Lender and insurer accepted

Verification certificate format and CA signature accepted by PSU and private banks and major insurance surveyors across Maharashtra.

Depreciation realignment

We identify useful-life mismatches and incorrect depreciation methods — preventing future audit qualifications and deferred tax surprises.

Reviewed by CA Nainit Savla Founder & Lead Partner, The Classic Partners LLP — B.Com, Associate Chartered Accountant (ICAI), ex-KPMG Real Estate Advisory. Leads fixed asset audit and verification engagements for manufacturing, infrastructure and hospitality clients.

FAQs

Fixed asset audit questions business owners and CFOs ask us

Straight answers before you engage an audit firm.

What is a ghost asset and why does it matter? +

A ghost asset is an item that appears on your Fixed Asset Register — carrying a book value and being depreciated — but cannot be physically located. It may have been lost, stolen, scrapped or transferred without a FAR update. Ghost assets overstate your gross block and net block, inflate depreciation, distort insurance sums insured, and mislead lenders and due diligence teams about your actual asset base. Our verification identifies and documents every ghost asset so you can write them off and clean the register.

How often should fixed assets be physically verified? +

CARO 2020 requires verification at "reasonable intervals" — which for most companies means at least once every three years, with a complete verification at least once in that cycle. However, companies with significant capital expenditure, multiple locations or lender reporting obligations should verify annually. We recommend a full verification when the FAR has not been verified in the last two years or after any major capex project, acquisition or change of premises.

Does CARO 2020 specifically require fixed asset verification? +

Yes. Para 1(ii) of CARO 2020 requires the statutory auditor to report whether property, plant and equipment are physically verified by the management at reasonable intervals and whether any material discrepancies were noticed and properly dealt with in the books. A signed independent verification report from a CA firm is the strongest evidence an auditor can rely on to satisfy this requirement.

Can you tag and verify assets across multiple factory and office locations? +

Yes — multi-site engagements are the norm, not the exception. We plan location-by-location with access schedules agreed with your facility managers, and issue a single consolidated FAR reconciliation and certificate covering all sites. For locations outside Mumbai, we coordinate local verification teams under our supervision protocol, with photo and tag documentation managed centrally.

What happens to assets found physically that are not on the FAR? +

Unrecorded additions — assets found physically but absent from the FAR — are documented in our report with estimated replacement cost, location and condition. Management then decides whether to capitalise them at cost or estimated fair value, with the corresponding accounting entry and depreciation catch-up calculated by our team. This situation is common after capex projects where items are expensed instead of capitalised.

How is a fixed asset audit different from an internal audit? +

A fixed asset audit is a focused, physical verification of tangible assets with a signed certificate — specific, bounded and documentable. An internal audit is a broader periodic review of processes, controls and risks across the business, of which asset management may be one component. A dedicated fixed asset audit by an independent team produces more reliable FAR reconciliation than an asset verification embedded in a broader internal audit scope where depth is traded off against breadth.

Ready to verify and clean up your Fixed Asset Register?

Tell us the number of locations, approximate asset count and whether the audit is for a statutory, lender or insurance purpose. You'll get a fixed quote within one working day.

Book a free consultation