Review Depreciation Schedules for Audit Readiness

By Gregg Hopfeldt · 2025-05-19

A defensible depreciation schedule provides auditors with a stable, verified record of how asset values reduce over time—consistent calculation logic, no formula drift, and a clear trail from cost to carrying value.

Purpose

Reviewing your depreciation schedule before period-end ensures your fixed asset register reflects accurate, repeatable figures that reconcile to your general ledger and remain unshakeable under external review.

Logic

The schedule draws from category-based depreciation settings that govern how each asset class reduces in value. Two verified methods apply:

  • Straight Line — Reduces the asset by an equal amount each year over its useful life.

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

Every asset inherits its rate and method from the category configuration. The calculation logic remains consistent across the register—no manual overrides, no ad-hoc adjustments, and no reconciliations invented after the fact. This is safer than a manual spreadsheet adjustment because it preserves audit trail integrity: each value traces back to a verified setting, and historical posted depreciation remains unchanged even if settings are revised later.

The register calculates depreciation up to the beginning of the current financial year and for the current year, anchored to the Start of the Financial Year in your settings. This produces a stable, point-in-time view suitable for audit workpapers.

In non-accountant, human, speak this means the register's logic stays the same and produces a consistent output that can be trusted.

Steps

  1. Verify depreciation settings by category

    Open the Fixed Asset Register, select Settings, and confirm each category has the correct Rate (%) and Method. Ensure the Start of the Financial Year is accurate. See Set depreciation rates and methods.

  2. Confirm all disposals are recorded

    Record any assets sold, scrapped, or otherwise removed during the period. Disposed assets are marked as Disposed and remain visible in the register, preserving the audit trail while excluding them from ongoing depreciation. See Dispose of assets in your register.

  3. Generate the audit report

    Click More and select Generate Audit Report. Verify 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 spreadsheet import. See Generate an audit report.

  4. 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 whether straight-line or reducing balance was applied.

Outcome

A stable, audit-ready depreciation schedule: a 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 provides a quietly confident record you can attach to audit workpapers or file 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 Roll over to a new financial year. The rollover creates a history record that documents 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.

Regards Gregg

For the practical steps, see the audit report guide above.