Dissimilarities between Valuation and Verification of Assets
Valuation and verification of assets are complementary to each other. Valuation implies significant assessment and testing of determined values of assets on the source of its effectiveness during an exacting period. It helps in assessing the accurate financial situation of the enterprise. Verification means proving accuracy or verification. It is an investigation into the value, rights and title, subsistence and custody, the occurrence of any charge on the assets of the organization.
Until and unless the valuation of assets is made, verification is impossible even though they have some differences which are as follows:
(a) Valuation is based on evidence but verification is based on the individual check. Verification is a final work but valuation is needed to the verification.
(b) Verification means ascertaining the correctness of the assets and liabilities appearing in the Balance Sheet by documentary proof and substantial examination. Valuation means testing the correctness of the valuation of the assets and the liabilities according to the accepted accounting principles.
(c) Verification is the work of auditor but valuation is the work of concerned authority or board. Valuation checks the amount shown in accounts but verification checks the items shown in the balance sheet.
(d) Verification is done with the object of proving the subsistence, ownership, possession, freedom from charge and proper valuation. Valuation is done to ensure that the Balance Sheet shows a true and fair view of the financial position of the organization.
(e) Valuation is made throughout the year but verification is made at the end of the year.