Statutory auditors must report material discrepancies between physical equipment and the Fixed Asset Register under CARO 2020. Learn how to manage 3-year physical verification cycles and asset barcode audits.
Sarah Jenkins
Tech Procurement & FinOps Advisor
In corporate financial audits, statutory auditors must review management's internal controls over physical capital assets. Under Clause 3(i) of CARO 2020, statutory auditors must certify whether the company maintains proper records showing full particulars, including quantitative details and situation of Property, Plant, and Equipment, and whether physical verification was performed during the year.
While high-turnover IT equipment (laptops, mobile workstations) should be verified annually, heavy industrial equipment may be audited on a rotational 3-year cycle, provided all locations are covered within the triennial period. If a plant manager postpones physical counts past the 3-year mark, auditors must flag an internal control deficiency.
Without systematic physical verification, companies accumulate 'ghost assets'—machinery or office assets that were decommissioned, sold for scrap, or stolen, but still sit on the balance sheet depreciating annually. This distorts return on assets (ROA) and results in overpaying property insurance premiums.
RenewOS links asset serial numbers, physical locations, warranty expiry dates, and scheduled verification cycles into one audit-ready asset database, ensuring finance teams pass statutory audit scrutiny effortlessly.
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