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    Question

    Which of the following are an auditor’s objectives with regard to verification of assets?

    (i)  Assets exist

    (ii) Assets belong to the client

    (iii) Assets are in possession of the client

    (iv) Assets are not subject to undisclosed encumbrances or lien

    A (i) and (ii) only Correct Answer Incorrect Answer
    B (i), (ii) and (iii) only Correct Answer Incorrect Answer
    C (i) and (iii) only Correct Answer Incorrect Answer
    D (i), (ii), (iii) and (iv) Correct Answer Incorrect Answer

    Solution

    The objectives of an auditor with regard to the verification of assets include: (i) Assets exist: The auditor's objective is to confirm that the assets recorded in the financial statements actually exist and are tangible assets that can be verified. (ii) Assets belong to the client: The auditor aims to ensure that the assets are owned by the client and not by any other entity or individual. This involves verifying legal ownership and title to the assets. (iii) Assets are in possession of the client: The auditor's objective is to confirm that the assets are physically in the possession of the client and not held by any third party. (iv) Assets are not subject to undisclosed encumbrances or liens: The auditor seeks to determine whether there are any undisclosed encumbrances or liens on the assets, such as mortgages, pledges, or other forms of security interests that could affect the client's ownership or rights over the assets.

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