CA Karan wants to test the “completeness” assertion relating to intangible assets reflected in the financial statements of Data Solutions Private…

The audit procedures to be performed by CA Karan to test completeness assertion relating to intangible assets are as under: Verify the movement in the intangible assets schedule compiled by the management i.e. Opening balances + Additions – Deletions = Closing balances. Tally the closing balances to the entity's books of account.Check the arithmetical accuracy of the movement in intangible assets schedule.For additions during the period under audit, obtain a listing of all additions from the management and undertake the following procedures: -For all material additions, verify whether such expenditure meets the criterion for recognition of an intangible asset as per AS 26.Ensure that no intangible asset arising from research (or from the research phase of an internal project) should be recognised. Expenditure on research (or on the research phase of an internal project) should be recognised as an expense when it is incurred.Check the certificate or report or other similar documentation maintained by the entity to verify the date of use of the intangible which could be linked to date of commencement of commercial production/ economic use to the entity, for all additions to intangible assets during the period under audit.Verify whether the additions (acquisitions) have been approved by appropriate entity's personnel.Verify whether proper internal processes and procedures like inviting competitive quotations/ proper tenders etc. were followed prior to finalizing the vendor for procuring item of intangible assets by testing those documents on a sample basis.In relation to deletions of intangible assets, understand from the management the reason and rationale for deletion and the manner of disposal. Obtain the management approval and disposal note authoring disposal of the asset from its active use. Verify the process followed for sale of discarded asset, for example inviting competitive quotes, tenders and the basis of calculation of sales proceeds. Verify that the management has accurately recorded the deletion of intangible asset (original cost and accumulated amortization up to the date of disposal) and the resultant gain/ loss on disposal in the entity's books of account.