[AUD] Property, Plant and Equipment

Initiation & Execution of Equipment transactions

- Request for major repairs

- request for purchase of equipment re

 

Acquisition

- approved by BOD

- vendor's invoice, special requisition form(P.O x)

- deeds, tax bill, legal title

 

Disposal

- mathematical accuracy, recalculate gain/loss

  * problem with AD, large loss when asset retirement

- disposal agreement, lien on plant equipment

* Unrecorded retirement > overstatement,

  PPE records to location during plant tour: Existence

 

Control

- prenumbered, periodically accounted by the internal auditor

- request for repairs approved at a higher level than initial dept.

- CR low > Limited test ST

       high > extensive YE

 

ST

Ratio: Depreciation: valuation& allocation

Analytical procedure: Capital & Expense > compare with PY, Budget

 

- Compare PY balance/work paper with FS

- Compare CY balance with general ledger/trial balance

- Analytical procedure to assess the reasonableness of the account

Analytical procedures	Possible misstatements
- depreciation exp ratio vs PY's ratio	valuation & allocation
- repair ratio, maintenance exp vs PY's - variance with formal budget system	Capital and revenue exp
- insurance expense ratio vs PY's	over/understatement of PPE

 

- continuing audit client TOD of the transaction, rather than TOD of Balance

  transaction approach for the slow rate of turnover, large amount of each transaction

- PPE sold not removed on book > Right & obligation