Meaning
Physical verification procedures allow a prospective buyer or lender to confirm the existence and condition of tangible property. An asset inspection involves a site visit where a qualified surveyor or engineer validates that the equipment or real estate matches the description in the sale agreement. This process identifies any hidden defects or maintenance issues that could affect the valuation of the target.
It is a standard step in the closing of an industrial transaction.
Operational Audit
Audit examines the performance history and maintenance logs of the machinery. During an asset inspection, the reviewer checks if the items are being used within their designed limits and whether they meet local safety standards. This prevents the buyer from inheriting significant repair costs or regulatory liabilities.
It provides a realistic view of the remaining useful life of the property.
Physical Verification
Verification focuses on the legal identification of the items. Each piece of equipment is checked against the asset register to ensure that the seller has clear title. An asset inspection confirms the serial numbers and location of the property.
This ensures that no items have been removed or replaced since the last audit.
Remediation Pathway
Pathway defines the specific steps for fixing found defects.
