25-10-2012, 04:07 PM
VERIFICATION OF PLANT & MACHINERY, PATENTS AND TRADEMARKS
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INTRODUCTION
WHAT IS VERIFICATION?
Proving the existence or confirmation of assets and liabilities on the date of the balance sheet.
It involves the examination of the value, ownership and title, existence and possession, and the presence of any charge on the assets.
Examine and ascertain not only the correctness of the value of assets and liabilities stated in the balance sheet, but also to confirm that they actually exist on the date of the balance sheet.
VERIFICATION OF PLANT AND MACHINERY
The auditor should call for the plant register or detailed break up schedule of plant and machinery. For the balance appearing in the balance sheet, he should identify the specific items and check the details thereof.
In the case of a company, the management is duly bound to physically verify the plant and machinery, and the auditor should ask for the related working papers for his examination.
The additions and disposals during the year should be verified with reference to the purchase invoices and other appropriate documents.
The auditor should verify some of the important items of plant and machinery on test check basis.
VERIFICATION OF PATENTS
A patent is an official document which secures to an investor the exclusive right to make use or sell his invention.
Actual patent should be physically verified by the auditor and it should be seen that it has been duly registered. In case of joint registration of the patent with an individual, who might have developed the patented article, it should be seen that a registered assignment by the individual in favor of the company has been made.
AUDITOR’S DUTY REGARDING VERIFICATION:
The auditor should check the patent register in order to verify that it has been properly included therein.
The auditor should also ensure that the legal life of the patent has not yet been expired.
The latest renewal certificate of the patent should also be verified by the auditor.
The patent may also be subject to litigation about its title. A certificate from the solicitors of the company should be obtained to ensure that it is free from encumbrance.
VERIFICATION OF TRADEMARKS
A trademark is a distinctive mark attached to the goods offered for sale in the market so as to distinguish the same from similar goods available in the market and also to identify them with a particular trader.
VERIFICATION:
Trademarks can be verified by examining the assignment deed duly endorsed by the office of the register of trademark. If trademarks are purchased, the assignment of interest or the assignment deed should be inspected.