A fixed asset register goes stale through accumulation, not through one failure — an asset moves to a new office and nobody updates the location field, an item is scrapped and the disposal entry never gets made, a new asset is added without a useful life assigned because nobody was sure what to put there. None of these individually look like a problem at the time. Together, over a few years, they add up to a register that confidently states things that are no longer true, which is exactly why a physical verification often turns up more discrepancies than anyone expected going in.
How the drift actually accumulates
- Relocations: an asset physically moves between offices or departments, and the register's location field is never updated to match.
- Silent disposals: an asset is scrapped, sold, or written off informally, with no disposal entry removing it from the register.
- Incomplete additions: a new asset is added to get the capex recorded, with location or useful life left blank to be filled in "later."
- Duplicate entries: the same physical asset gets a second entry after a system migration or a bulk data import, each tracked independently from then on.
Common practice, not a requirement
A register can be arithmetically perfect — the depreciation calculations correct, the totals tying to the trial balance — and still be substantively wrong about where assets are and whether they still exist, because those two kinds of accuracy are checked completely differently.
Why this specifically matters for CARO
CARO's fixed asset clause doesn't just ask whether the numbers add up — it specifically asks whether proper records are maintained showing location, and whether a reasonable physical verification programme exists. A register that's internally consistent but hasn't been checked against physical reality in years can fail this specific requirement even though nothing looks obviously wrong in the ledger.
This is practical guidance written for audit teams, not an authoritative statement of any standard or statute. Standards, forms and timelines change. Check the current text issued by the ICAI and the relevant authority before relying on anything here in an audit file.
Related resources
- Fixed assets & capexFixed asset register audit: completeness and accuracy checksWhat a fixed asset register must contain, how to tie it to the general ledger, and the gaps that quietly survive year after year if nobody checks for them.
- CARO & Companies ActThe fixed asset register CARO reporting couldn't rely onThe register had a location column. Nobody had updated it in three years, across two office moves and a warehouse relocation.
- Fixed assets & capexFixed asset disposal: audit checklistThe authorisation trail for a disposal, testing the gain-or-loss computation, cleaning up the register and insurance, and GST on the sale of used assets.
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Each one reads a file entirely in your browser — or, for two of them, just answers a few questions — and nothing is ever uploaded.
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