Issues in audit of intangible assets, Auditing

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Issues in Audit of Intangible Assets

The two key issues in such audit of intangible assets are:

(a) Recognition of intangible assets

The audit problem here is to make sure that all the requirements of IAS 38 are net before intangible assets are identified. The identification, measurement and distinction among 'research' and 'development' expenditure are potentially tricky areas for the auditor.

(b) Measurement after initial recognition

Intangible may only be revalued upwards some times in practice this may be rare whether an active market in them exists.  Whether an active market does exist evidence of valuation will be available.  Active markets are usual in many industries.  As for example fishing quotas in the fishing industry may be purchased through a company at Kshs. per ton.  This increase can be shows in the financial statements through the company provided such it is verifiable from observed activity of selling and buying of quotas on the market and the verification of value evidence.


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