During the audit of Grace Pvt. Ltd., CA Tanu notices that significant amount of depreciation and amortisation charges are reflected in financial…

Auditor needs to consider the following attributes while verifying for depreciation and amortisation expenses: - Obtain the understanding of entity's accounting policy related to depreciation and amortisation.Ensure the Company policy for charging depreciation and amortisation is as per the relevant provisions of Companies Act/ applicable accounting standards.The accounting policy has been applied consistently year on year. Any change in the accounting policy has been adequately disclosed.Whether the depreciation has been calculated after making adjustment of residual value from the cost of the assets.Whether depreciation and amortisation charges are valid.Whether depreciation and amortisation charges are accurately calculated and recorded.Whether all depreciation and amortisation charges are recorded in the appropriate period.Whether each part of an item of PPE with a cost that is significant in relation to the total cost of the item have been depreciated separately. Example: It may be appropriate to depreciate separately the airframe and engines of an aircraft, whether owned or subject to a finance lease.Whether the most appropriate depreciation method for each separately depreciable component has been used.