11. To test the effectiveness of controls over asset impairment, the auditorcould perform which of the following procedures?a. Perform analytical procedures.b. Send confirmations to the management specialist who performedwork related to the impairment.c. Inquire of management as to its process for determining assessmentimpairment.d. Inspect the asset for potential impairment.

The Audit standard "Understanding the Entity and Its Environment and Assessing the Risks of Material…

Answered: 11. To test the effectiveness of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Analytical procedures are required as a part of the: Internal control assessment. Detailed tests of balances. Procedures performed near the end of the audit. Substantive testing.
16. In performing risk assessment procedures for property, plant and equipment, an auditor may inquire of the client personnel which of the following questions? Group of answer choices Are depreciation policies in accordance with applicable financial reporting framework? Are disposals of property, plant and equipment properly authorized, removed from records including depreciation, and recorded in correct accounting period? Are all property, plant and equipment purchases, including finance leases, properly authorized, recorded in accordance with the capitalization threshold (e.g., P10,000) and in correct accounting period? All of the choices.
explain. If, after obtaining an initial understanding of a client's internal control, the auditor wishes to further reduce the assessed level of control risk relating to plant asset transactions, the auditor should next Make extensive substantive tests of plant asset balances. Establish the physical existence of current year additions. Complete the plant asset section of the internal accounting control questionnaire. Further test those internal control procedures relating to processing and recording plant asset transactions.
Which activities are performed in a change management audit? a) Assessment of the "design" of the change management controls b) "Operating effectiveness" testing of change approvals c) Assess source code management d) All of the above
Assume that the client’s internal controls over the recording and classifying of fixed asset additions are considered weak because the individual responsible for recording new acquisitions has inadequate technical training and limited experience in accounting. How will this situation affect the evidence you should accumulate in auditing fixed assets as compared with another audit in which the controls are excellent? Be as specific as possible.
In performing risk assessment procedures for property, plant and equipment, an auditor may inquire of the client personnel which of the following questions? a. Is depreciation calculation and recording automated? b. Is there periodic physical count and tagging of property, plant and equipment? Is the result of the count reconciled to ledgers and general ledgers? c. Both a and b. d. Neither a nor b.
Identify important internal control activitiespresent in a properly designed system tomitigate the risk of material misstatementsfor each relevant assertion in the revenueand collection cycle.
Give examples and practice on the situation of auditing fixed assets at the client as follows (in the situation, the information is required): - Information on the type of entity and the accounting period; - Information on internal control of tangible fixed assets and two (2) weaknesses occurring in the management and accounting of tangible fixed assets at the entity. You must mention 2 control procedures to prevent the above weakness.
How do you assess the risk of material misstatement associated with the audit of inventories?
Audit firms may have a standardized audit programs for auditing long-lived assets but auditors must still customize the audit program based on the assement of the risk of material misstatement. Why/how?

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