Existence and rights: is the asset there and theirs?

How the existence and the rights and obligations assertions differ, and which audit tests give evidence for each, from inspection to title documents.

By Achekam · 11 October 2026 · 4 min read · For Accountants & audit firms in South Africa, Nigeria, Kenya

The team found every delivery vehicle on the asset register parked in the client's yard. Existence: tick. Then the bank confirmation arrived and showed that several of them were financed under agreements where the finance house keeps ownership until the last instalment. Others belonged to the managing director personally and were parked at the yard for convenience.

Seeing an asset proves it exists. It does not prove the client owns it. Existence and rights and obligations are separate assertions, and a test that answers one often says nothing about the other. This article explains the difference and the audit tests that give evidence for each.

Existence: is it really there?

Existence asks whether assets, liabilities and equity interests recorded in the statements actually exist at the reporting date. The risk is overstatement: assets recorded that are not there, because they were sold, scrapped, stolen, never bought, or invented.

ACCA lists audit tests relevant to existence: physical verification of non-current assets, circularisation of receivables and payables, and the bank letter. Each gets evidence from outside the client's records: the auditor's own eyes, or a third party's reply.

The direction of testing matters. To test existence, start from the record and go to the evidence: pick items from the asset register or the receivables ledger and find them in the yard or confirm them with the customer. Starting from the yard and finding the vehicle in the register tests completeness, which is a different question.

Rights and obligations: does the client own it, or owe it?

ACCA explains that, under ISA 315 (Revised 2019), the rights and obligations assertion for account balances means the entity holds or controls the rights to assets, and that liabilities are the obligations of the entity.

The risks are subtler:

• assets the client uses but does not own or control: leased under terms that leave control with the lessor, borrowed, held on consignment, or belonging to a director or a related company;
• assets the client owns but has pledged as security, which need disclosure;
• liabilities recorded that belong to someone else, such as a director's personal loan paid through the company;
• liabilities the client has but has not recorded, which is also a completeness question.

The evidence for rights and obligations is documentary. A physical inspection cannot tell you who holds title.

Physical inspection, confirmations and the bank letter

The three tests ACCA lists for existence each do some work on rights and obligations too, if used well:

AccountingTools notes that auditors can use the fixed asset register to verify the existence and condition of assets. Note the condition of each item while inspecting: damaged or idle assets are a valuation question, but you will only see them if you look.

Title documents, contracts and assets held for others

For rights and obligations, go to the documents:

• Property: title deeds or a search of the deeds or land registry in the relevant country, checking the registered owner and any bonds or charges.
• Vehicles: registration documents in the client's name, and finance agreements showing whether ownership has passed.
• Equipment and inventory: purchase invoices in the client's name; consignment agreements showing goods held for others.
• Investments: share certificates or registry statements.
• Liabilities: loan agreements, contracts and statements from creditors, checked to be addressed to the client.

Ask directly whether the client holds any assets for others or uses assets belonging to directors or related parties. The answer often surprises the finance team.

Planning confirmations and recording inventory observation in Achekam

In Achekam, staff plan external confirmations and prepare the requests, and a different person approves each request before it goes. Each respondent, such as a customer, supplier or bank, answers through a single-use link. Achekam does not send the requests itself; staff send them and record how. Our article on confirmations and component auditors covers designing and following up confirmations.

For physical work, the Inventory Observation screen keeps the team's count notes against the chosen engagement, alongside the rest of its work. The ISA numbers on its badges are labels and do not show that a standard has been met. Recording items held for others, or bearing another owner's marks, in the observation notes gives the rights and obligations work a starting point.

Valuation as the next question

Once an asset is shown to exist and to belong to the client, the next question is what it is worth. ACCA explains that the accuracy, valuation and allocation assertion means assets, liabilities and equity interests are included at appropriate amounts, with any valuation or allocation adjustments properly recorded.

The tests overlap in practice: the inspection that confirms a machine exists also shows it is rusting in a corner, and the title deed that proves ownership also shows the bond that may affect its disclosure. Plan the work so each visit or document answers every assertion it can. See auditing property, plant and equipment for how this plays out on fixed assets.

ACCA's technical article on assertions sets out each assertion, including existence and rights and obligations, with the tests that give evidence for them.

On your next asset inspection, take the finance agreements and title documents with you. Matching what you see to who owns it, on the spot, saves a second visit.

General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.