EBK PRINCIPLES OF AUDITING & OTHER ASSU
21st Edition
ISBN: 9781260299434
Author: WHITTINGTON
Publisher: YUZU
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Chapter 13, Problem 1RQ
To determine
Explain the factors related to the verification of plant and equipment that are not applicable to audit work.
Expert Solution & Answer
Explanation of Solution
Verification of the assets:
It is a process of providing confirmation regarding a specific event and activity. When the auditor performs audit them he verify the transactions for their accuracy and originality.
Explain the factors related to the verification of plant and equipment that are not applicable to audit work:
- The high value of the plant and equipment requires the auditor’s verification. The high value of the item could affect the
balance sheet to a large extent. The value of the current assets is relatively low. - The frequency of the transaction or change in the plant and equipment is quite low. The current assets have a high turnover. Cash and inventory fluctuate very swiftly.
- The cut-off transaction related to the plant and equipment would not affect the profitability of the company to the extent that the current asset would affect. Most of the plant and equipment transactions are recorded in the balance sheet of the company.
Thus, the high value of the items, frequency of the transaction and impact of the cut-off transactions are the factors related to the verification of plant and equipment that are not applicable to audit work.
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Students have asked these similar questions
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.
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.
Group of answer choices
a
c
b
d
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.
Chapter 13 Solutions
EBK PRINCIPLES OF AUDITING & OTHER ASSU
Ch. 13 - Prob. 1RQCh. 13 - K-J Corporation has current assets of 5 million...Ch. 13 - Prob. 3RQCh. 13 - Prob. 4RQCh. 13 - Explain the use of a system of authorizations for...Ch. 13 - Moultrie Company discovered recently that a number...Ch. 13 - Does a failure to record the retirement of...Ch. 13 - Prob. 8RQCh. 13 - Prob. 9RQCh. 13 - Prob. 10RQ
Ch. 13 - Prob. 11RQCh. 13 - Prob. 12RQCh. 13 - Prob. 13RQCh. 13 - Prob. 14RQCh. 13 - Prob. 15RQCh. 13 - Gibson Manufacturing Company acquired new factory...Ch. 13 - Prob. 17RQCh. 13 - Do the auditors question the service lives adopted...Ch. 13 - Prob. 19RQCh. 13 - Explain how the existence of lease agreements may...Ch. 13 - Prob. 21RQCh. 13 - Prob. 22QRACh. 13 - Prob. 23QRACh. 13 - Gruen Corporation is a large diversified company...Ch. 13 - Prob. 25QRACh. 13 - Prob. 26QRACh. 13 - Prob. 27QRACh. 13 - Prob. 28QRACh. 13 - Prob. 29QRACh. 13 - Prob. 30QRACh. 13 - Prob. 31QRACh. 13 - To assure accountability for fixed-asset...Ch. 13 - Prob. 32BOQCh. 13 - Which of the following is an internal control...Ch. 13 - Which of the following accounts should be reviewed...Ch. 13 - Prob. 32EOQCh. 13 - Prob. 32FOQCh. 13 - Which of the following statements is not typical...Ch. 13 - Prob. 32HOQCh. 13 - Prob. 32IOQCh. 13 - An effective procedure for identifying unrecorded...Ch. 13 - Which of the following is not an overall test of...Ch. 13 - Prob. 32LOQCh. 13 - Prob. 33OQCh. 13 - Analysis of which account is least likely to...Ch. 13 - Prob. 34BOQCh. 13 - Prob. 34COQCh. 13 - Prob. 34DOQCh. 13 - A search for overstated property, plant, and...Ch. 13 - The following are typical questions that might...Ch. 13 - Prob. 36PCh. 13 - Prob. 37PCh. 13 - Chem-Lite, Inc., maintains its accounts on the...Ch. 13 - Prob. 39PCh. 13 - You are reviewing the property, plant, and...
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