How far is an Auditor Responsible for Verification?

Auditor Responsible for Verification:

It is the duty of an auditor to report in concrete terms that the Balance Sheet exhibits a true and fair view of the state of affairs of a company. For this purpose, he has to examine the correctness of the money value of assets and liabilities shown in the Balance sheet. This is called verification of assets and liabilities of the business. Audit will be of no value unless assets and liabilities are verified. Auditor will be held responsible if verification is not made correctly.

In London Oil Storage Co. Ltd. Vs. Sear Husluck Co., it was observed that “It is the duty of the auditor to verify the existence of assets stated in the Balance Sheet and he will be liable for any damage suffered by the client, if he fails in his duty.”

Verification of asset is primarily the responsibility of the management because the management known better about the assets as regards there location, conditions etc. than that which an outsider (auditor) might be able to get on the inspection. Checking the valuation of assets forms part of auditor’s verification. Checking valuation means to determine the exact value of an asset on the basis of its utility.