Nimbus Digital Solutions Limited, engaged in providing technology-enabled business services, has several intangible assets recorded in its financial…

To establish the Existence of intangible fixed assets as at the period-end Audit Procedure: Since an intangible asset is an identifiable non-monetary asset, without physical substance, for establishing the existence of such assets, the auditor should verify whether such intangible asset is in active use in the production or supply of goods or services, for rental to others or for administrative purposes. Example: For verifying the existence of software, the auditor should verify whether such software is in active use by the entity and for the purpose, the auditor should verify the sale of related services/ goods during the period under audit, in which such software has been used. Example: For verifying the existence of design/ drawings, the auditor should verify the production data to establish if such products for which the design/ drawings were purchased, are being produced and sold by the entity. In case any intangible asset is not in active use, deletion should have been recorded in the books of account post approvals by the entity's management and amortization charge should have ceased beyond the date of deletion. From the facts of the case, mere inclusion of intangible assets in the books of account is not sufficient to establish their existence. The auditor should verify whether such assets are in active use for the purposes for which they were acquired, along with the related activities of the entity. Accordingly, the unused software and designs relating to products that were no longer being manufactured should be appropriately dealt with in the books of account after obtaining the necessary management approval, and amortisation should cease from the date of deletion.