AUDIT OF INTANGIBLES

Intangible assets are the identifiable monetary assets without physical substance. Therefore, in auditing
an intangible asset, an auditor must focus on the right of the company over those assets and their
economic value, whether if the valuation made by the company on the intangibles was reasonable or
not. (PAS 38)

Some common Intangible Assets:

1. Copyrights – When a client owns a copyright, no one else can use its printed work (such as a
book) or its recorded work (such as a musical score or a movie) without permission. Any original
piece of work is automatically copyrighted.
2. Trademarks – These are unique signs, symbols, or names that your client uses. For example,
Kleenex is a trademark, and no other company that makes facial tissues can use that name.
3. Patents – Patents provide licensing for inventions or other unique processes and designs. Items
that can be protected by patents run the gamut from pharmaceuticals to automobile circuitry to
unique jewelry designs.
4. Goodwill – Goodwill comes into play only during the purchase of a business by another business
for a price greater than the fair market value of the net assets acquired during the sale. (Net
assets are total assets less total liabilities.)