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Agree disposals recorded in the non-current asset register to cash book and sales invoice
How does this test for understatement
Are disposals recorded in the non current asset register first or in the cash book first
Is non current assets register a source document
The register is a “memorandum” record – totals should agree to the balances in the asset cost and depreciation a/cs in the general ledger, but it is not part of the double-entry bookkeeping system.
It’s a source of evidence – not a source “document” (like a purchase requisition).
During the year, management (and/or internal audit) will carry out routine checks on the existence of assets – this is an internal control. The source for this will be the asset register. Suppose the inspector sees that an asset is not in use and should be disposed of – that would be noted in the register – so this would then be confirmed by the auditor – whether there were disposal proceeds.
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