How Accountants Review Depreciation Schedules

By Gregg Hopfeldt · 2025-05-19

A reviewed depreciation schedule provides auditors with a stable, verified record that withstands scrutiny—consistent logic, clear reconciliation, and a defensible trail from cost to carrying value.

Why do accountants review depreciation schedules before audit?

Depreciation schedule review is the process by which accountants confirm that fixed asset values have reduced correctly over time, that calculation logic remains consistent with accounting policy, and that every movement from opening balance to closing carrying value traces cleanly through the register. The purpose is simple: a reviewed schedule eliminates surprises when an auditor asks to see the math behind your asset values.

The logic

The schedule draws from category-based depreciation settings that govern how each asset class reduces in value. Simple Fixed Assets applies two verified methods:

  • Straight Line — Spreads the cost evenly across the asset's useful life.

  • Diminishing/Reducing Balance — Applies a fixed percentage to the remaining book value each year, producing higher depreciation in earlier years.

For Straight Line, the annual calculation is =Cost ÷ Useful Life. For Diminishing Balance, the calculation is =Carrying Value × Rate (%). Every asset inherits its rate and method from the category configuration in Settings—no manual overrides, no ad-hoc adjustments, and no reconciliations invented after the fact.

Historical depreciation remains untouched when rates or methods are adjusted. New settings apply to future calculations only, preserving backward-defensible records.

Founder's Note

At 11 PM the night before an audit, a spreadsheet formula breaks because someone inserted a row six months ago and the cell references drifted. Or someone edited a formula, or manually input a number to force it to what they wanted. The totals still look plausible, so nobody noticed—until the auditor asks to trace a single asset from purchase to disposal. Simple Fixed Assets locks in the logic so the math cannot drift, even when the team is tired and the pressure is on.

From Excel to a locked register

A depreciation schedule built in Excel is a reliable starting point—familiar, flexible, and sufficient for small registers. But spreadsheets permit formula edits, row insertions, and manual overrides that leave no audit trail. When the register grows or the scrutiny increases, accountants need a system that preserves the calculation logic across periods and prevents quiet changes after the fact. Simple Fixed Assets provides that lock-in: verified settings, consistent application, and a reconciliation that traces itself.

Steps

Verify depreciation settings by category

Open the Fixed Asset Register, select Settings, and confirm each category has the correct Rate (%) and Method. Verify that the Start of the Financial Year matches your reporting period. See Set depreciation rates and methods.

Confirm all disposals are recorded

Check that any assets sold, scrapped, or otherwise removed during the period appear with a status of Disposed. These assets remain visible in the register for audit trail purposes but are excluded from ongoing depreciation. See Recording Asset Disposals Correctly (and Why Excel Misses Them).

Generate the audit report

Click More and select Generate Audit Report. Select Current Year or Previous Year as the report period. Confirm the header fields—Company Name, Report Title, Prepared By, Report Date—and adjust via Edit Header if needed. Export as PDF for a formatted document or Excel for a CSV suitable for additional analysis. See Generate an audit report.

Review the summary and reconciliation sections

Confirm the summary section shows cost, accumulated depreciation, and carrying value by category. Verify the reconciliation section traces opening balance through additions, disposals, depreciation, and closing balance. The footer notes which method was applied.

Check for ghost assets

Ensure no assets remain in the register that no longer exist. They may have been stolen, lost, destroyed, or for whatever reason can no longer be used. These "ghost assets" are a common audit finding. There is the potential for a ghost asset to increase depreciation and therefore improperly lower tax. This is likely to lead to an audit finding. Plus you could be insuring an asset that you no longer have. At least once every year check that every asset on your fixed asset register exists.

Check for zombie assets

Ensure that every asset is recorded on your fixed asset register. Essentially this is the opposite problem to a ghost asset. As above at least once a year check that all assets you own are recorded on your fixed asset register.

Outcome

A sharp, clear ledger with zero ghost assets, a reconciliation that traces every movement, and verified calculation logic that aligns with your accounting policy. The exported file attaches cleanly to audit workpapers or files for internal review—defensible, consistent, and free of surprises.

Before year-end close

If you are reviewing the schedule as part of a year-end process, the final step is to archive the current period and roll forward. See How to Roll Forward a Depreciation Schedule Each Year. The rollover creates a history record documenting the transition between periods—an additional layer of audit trail for your fixed asset records.

Common issues

  • Figures do not reconcile: Confirm depreciation settings match your accounting policy and that all disposals are recorded.

  • Wrong period: Verify the Start of the Financial Year in settings and complete rollover if reporting on a prior year.

  • Assets appear missing: Filters or grouped views may hide rows. Clear any active filters to see the full register.

In Simple Fixed Assets you can run an audit report in one click.

Stay Depreciated, Gregg