Verification in auditing refers to the process of confirming the truth or proving the existence of assets and liabilities appearing in the financial statements. The objectives of verification are to show the correct valuation of assets and liabilities, to know whether the balance sheet exhibits a true and fair view of the state of affairs of the business, to find out the ownership and title of the assets, and to find out whether assets are free from encumbrances.
Verification can be done offsite or onsite. Offsite verification means verification by checking documents, official records, photos, and by questioning staff responsible or otherwise trusted to be a reliable source for the facility in verification. Onsite verification means the verifying party is physically visiting the facility, getting introduced into due facts about it on the site where the facility is located and operated.
The verification process may be regulated by law in certain countries. The auditor inspects the assets appearing in the financial statements to confirm their existence, ownership, proper valuation, possession, freedom from encumbrances, and proper recording. The auditor should verify important points for verification and valuation of loans, such as the amount of loan, the rate of interest, the period of loan, the terms of repayment, and the security offered.
