Land can be classified in separate categories and accounts: bare land (no properties), land with own buildings land with structures of 3rd parties and land with levels. Structures incorporate installations, mend, diversifications and infrastructure.
Auditing of “Lands” and “Constructing initiatives” has the pursuing main objectives:
– Make certain of the content existence of these kinds of belongings
– Verify no matter whether the company is the genuine proprietor of its possess assets
– Make certain that assets have been assessed and registered in the equilibrium sheet in accordance to their right price
– Considering their maintenance situation and age, draw appropriate conclusions with regard to justification of depreciation measures as nicely as depreciation sum and rate utilized:
– Make positive that obtain and transferals of fixed property are reflected in the bookkeeping by way of relevant registrations
– Assess the threats to possession of fastened property (e.g. fireplace) and evaluate them with insurance policies deals signed.
Accounting and specialized suggestions
Auditing involves at the very least the adhering to:
– Examine the justification of house on land and other immovable house, residence titles, cadastral registers, home loan registers and buy contracts on the date of equilibrium sheet
– Each fastened asset in this part should be crosschecked and correspond with: purchase cost, cadastral assessment, insurance policies worth, accounting value, home loan alienation value, product sales price, manufacturing worth (real or theoretical), alternative benefit, price from evaluation and tax stories
– Remark on historical past of figures for all modifications happening in the respective accounts of these investments
– Examine each indicator or component relevant to accounts for lands and buildings and judge whether or not changes need to be regarded as investments or utilization fees
– Continue with website visits in buy to notice any new installations or damages for the function of crosschecking them with respective costs in the bookkeeping
– Recognize eventual non-occupied places
– Confirm the aging situation and servicing of buildings and crosscheck with amortizations made till the second of audit
– Make positive that needed amortizations have been correctly manufactured, in conformity with relevant laws and policies and examine calculations created for these amortizations
– Contemplate potentials for fraudulent bookkeeping: unjustified obtain at extremely higher cost, unjustified sale at really minimal price tag, inclusion of utility costs in fastened assets or vice-versa, cost-free-of-charge lease contracts, free-of-cost contracts for third events, use of organization installations for personal functions, deviations in between real cost, registered price tag and the value in the authentic act
– For new buildings, check the real value, eventual destruction expenses and confirm whether or not very best provides have been noticed
– Take a look at how the cost of properties is decided and whether staff wages are entered in the bookkeeping
– Make sure that values have been modified to mirror modifications in substitution cost
– Detect instances when costs have been hidden in notary functions
– Analyze processes used so that each investment decision obtain is right away covered by insurance coverage offers
– Examine bookkeeping for damages in the structures
– Examine commissions and payments to intermediaries for the duration of acquire of lands and properties
– Examine steps to keep set assets in good issue to promise their best use (servicing services, periodic inspections, etc.)
– Examine for real insurance, home loan, pledged by the business which influence land or immovable house. If indeed, examine the guaranties used and at the very least verify: the mother nature of guaranties, mother nature and amount of commitments guarantied and beneficiaries
– In the annex, mention adjustments in land and immovable residence occurred in the course of audit
Special interest must be devoted to accounting treatment method of fastened assets in this part:
a) Accounting treatment for land buy and sale
1. When land is entered in a firm’s belongings, the price is debited in account 211 “Land” as contribution price, acquire price or credit respectively in account for “principal belongings (person or group 1) or in the account “Partners account for contributions in the company” or “Suppliers of fixed assets”. Account 211 registers the value of land owned by the business. It is essential to distinguish amongst separate accounts, based on the mother nature of element factors of mounted belongings:
– Bare lands (no properties)
– Improved lands (with channels, and so on)
– Underground and over soil: phrases used when the firm is not the operator of the 3 components hooked up to the very same portion of terrain: land, underground and previously mentioned soil
– Exploited lands (carriers, mineral levels) which are the only factors topic to depreciation
– Residential terrains with one particular a lot more properties.
two. In the course of product sales, the price of origin for components bought and that of amortization, if any, are taken from the respective accounts. Their net sum is debited to account 652 “Accounting value of aspects for fastened belongings marketed” at the exact same time, account 752 “Incomes from factors of mounted assets offered” is credited in the debit of account 462 “Ask for to acquire from set belongings sold”. 中小企報稅 are shut in credit of the respective subdivision of account seventy eight “Reacquisition of amortizations and provisions”.
b) Accounting remedy of sale-purchase functions in design
In scenario a construction is purchased for a price which does not separate land price tag from constructing price tag, only the developing cost part is subject matter to amortization. As a result, when a firm buys a building, we have to make positive whether or not it has divided the world-wide buy expense in share with the relative benefit attributed to each of the two aspects (account 211 “Land” and 212 “Developing” in the complete benefit of immovable home).
one. When buildings are entered as firm residence, account 212 “Buildings” or its subdivisions are debited:
– For incoming worth,
– For acquire cost,
or for the true expense of home generation, in credit rating of:
– Account one zero one “Principal property (principal or person)” or account 4561 “Associates – Account for contributions in society”,
– Account 404 “Suppliers of set belongings or other respective accounts,
– Account seventy two “Generation of mounted assets”.
two. In scenario of income, the worth of origin for properties sold and respective amortizations are taken from their respective accounts. Their variation is debited to account 652 “Accounting value of aspects for mounted belongings offered” at the exact same time, account 752 “Incomes from aspects of set belongings marketed” is credited in the debit of account 462 “Ask for to receive from set assets sold”. Provisions are shut in credit rating of the respective subdivision of account seventy eight ” Re-acquisition of amortizations and provisions”.