Land can be classified in separate types and accounts: bare land (no structures), land with personal buildings land with buildings of 3rd get-togethers and land with levels. Structures include installations, fix, adaptations and infrastructure.
Auditing of “Lands” and “Building assignments” has the pursuing significant targets:
– Make sure of the material existence of this kind of assets
– Confirm whether or not the business is the actual operator of its personal assets
– Make confident that belongings have been assessed and registered in the equilibrium sheet according to their correct benefit
– Considering their upkeep issue and age, attract appropriate conclusions with regard to justification of depreciation actions as properly as depreciation quantity and charge applied:
– Make sure that acquire and transferals of mounted assets are reflected in the bookkeeping via appropriate registrations
– Evaluate the threats to ownership of fixed property (e.g. fire) and assess them with insurance policy offers signed.
Accounting and specialized recommendations
Auditing consists of at the very least the pursuing:
– Check out the justification of residence on land and other immovable residence, house titles, cadastral registers, home loan registers and acquire contracts on the day of balance sheet
– Each and every fixed asset in this area should be crosschecked and correspond with: obtain price, cadastral evaluation, insurance coverage worth, accounting worth, mortgage alienation value, product sales benefit, creation value (true or theoretical), substitution worth, benefit from assessment and tax studies
– Remark on background of figures for all adjustments taking place in the respective accounts of these investments
– Take a look at each indicator or component connected to accounts for lands and structures and choose whether adjustments ought to be deemed as investments or utilization charges
– Continue with internet site visits in purchase to notice any new installations or damages for the function of crosschecking them with respective costs in the bookkeeping
– Recognize eventual non-occupied areas
– Verify the ageing situation and routine maintenance of buildings and crosscheck with amortizations manufactured till the instant of audit
– Make positive that essential amortizations have been correctly created, in conformity with related regulations and rules and verify calculations made for these amortizations
– Contemplate potentials for fraudulent bookkeeping: unjustified obtain at quite large price, unjustified sale at really lower price tag, inclusion of utility costs in set assets or vice-versa, free-of-demand lease contracts, free-of-demand contracts for third get-togethers, use of firm installations for personalized reasons, deviations between actual price, registered value and the cost in the genuine act
– For new buildings, check out the actual expense, eventual destruction fees and confirm whether ideal gives have been noticed
– Analyze how the value of structures is decided and whether or not staff wages are entered in the bookkeeping
– Make positive that values have been modified to replicate alterations in alternative value
– Detect cases when charges have been hidden in notary functions
– Analyze methods used so that each and every expense acquire is right away coated by insurance coverage offers
– Take a look at bookkeeping for damages in the structures
– Examine commissions and payments to intermediaries in the course of obtain of lands and buildings
– Take a look at actions to preserve set property in great condition to ensure their very best use (upkeep solutions, periodic inspections, etc.)
– Verify for true insurance coverage, home loan, pledged by the business which impact land or immovable home. If indeed, examine the guaranties utilized and at the very least check: the character of guaranties, nature and quantity of commitments guarantied and beneficiaries
– In the annex, mention modifications in land and immovable property happened for the duration of audit
Unique consideration need to be devoted to accounting treatment method of fixed assets in this area:
a) Accounting treatment for land acquire and sale
1. When 審計師 is entered in a firm’s property, the value is debited in account 211 “Land” as contribution worth, obtain cost or credit history respectively in account for “principal belongings (personal or group 1) or in the account “Partners account for contributions in the firm” or “Suppliers of set assets”. Account 211 registers the benefit of land owned by the company. It is crucial to distinguish amongst separate accounts, based mostly on the mother nature of part components of mounted assets:
– Bare lands (no properties)
– Improved lands (with channels, and so forth)
– Underground and over soil: terms employed when the business is not the proprietor of the a few factors attached to the very same component of terrain: land, underground and previously mentioned soil
– Exploited lands (carriers, mineral layers) which are the only factors topic to depreciation
– Residential terrains with 1 a lot more properties.
2. For the duration of income, the worth of origin for components marketed and that of amortization, if any, are taken from the respective accounts. Their internet sum is debited to account 652 “Accounting price of factors for set belongings marketed” at the identical time, account 752 “Incomes from factors of set property bought” is credited in the debit of account 462 “Ask for to receive from fastened assets sold”. Provisions are shut in credit of the respective subdivision of account 78 “Reacquisition of amortizations and provisions”.
b) Accounting therapy of sale-acquire operations in development
In scenario a design is bought for a value which does not different land cost from constructing price tag, only the building price tag part is subject matter to amortization. For that reason, when a firm purchases a constructing, we should make positive whether or not it has divided the world-wide acquire value in proportion with the relative benefit attributed to each and every of the two factors (account 211 “Land” and 212 “Building” in the total price of immovable property).
1. When buildings are entered as firm residence, account 212 “Properties” or its subdivisions are debited:
– For incoming worth,
– For purchase cost,
or for the actual price of property production, in credit history of:
– Account 101 “Principal assets (principal or specific)” or account 4561 “Partners – Account for contributions in society”,
– Account 404 “Suppliers of mounted property or other respective accounts,
– Account 72 “Creation of fixed belongings”.
2. In situation of sales, the value of origin for buildings marketed and respective amortizations are taken from their respective accounts. Their big difference is debited to account 652 “Accounting value of aspects for mounted belongings bought” at the very same time, account 752 “Incomes from aspects of fixed property offered” is credited in the debit of account 462 “Request to obtain from set assets sold”. Provisions are closed in credit of the respective subdivision of account 78 ” Re-acquisition of amortizations and provisions”.