Loose-leaf For Auditing & Assurance Services: A Systematic Approach
11th Edition
ISBN: 9781260687637
Author: William F Messier Jr, Steven M Glover Associate Professor, Douglas F Prawitt Associate Professor
Publisher: McGraw-Hill Education
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Question
Chapter 14, Problem 14.10RQ
To determine
Concept Introduction:
An analytical procedure is a part of
To discuss:Three substantive analytical procedures that can be used to audit the property, plant, and equipment
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Describe common substantive procedures used to audit a client’s property, plant, and equipment. How is depreciation audited? How are intangible assets audited?
Demonstrate how to report and analyze property, plant, equipment, and natural resources.
What is the relationship between the audit of property, plant, andequipment accounts and the audit of repair and maintenance accounts? Explain how theauditor organizes the audit to take this relationship into consideration.
Chapter 14 Solutions
Loose-leaf For Auditing & Assurance Services: A Systematic Approach
Ch. 14 - Prob. 14.1RQCh. 14 - Prob. 14.2RQCh. 14 - Prob. 14.3RQCh. 14 - Prob. 14.4RQCh. 14 - Prob. 14.5RQCh. 14 - Prob. 14.6RQCh. 14 - Prob. 14.7RQCh. 14 - Prob. 14.8RQCh. 14 - Prob. 14.9RQCh. 14 - Prob. 14.10RQ
Ch. 14 - Prob. 14.11RQCh. 14 - Prob. 14.12MCQCh. 14 - Prob. 14.13MCQCh. 14 - Prob. 14.14MCQCh. 14 - Prob. 14.15MCQCh. 14 - Prob. 14.16MCQCh. 14 - Prob. 14.17MCQCh. 14 - Prob. 14.18MCQCh. 14 - Prob. 14.19MCQCh. 14 - Prob. 14.20MCQCh. 14 - Prob. 14.21MCQCh. 14 - Prob. 14.22MCQCh. 14 - Prob. 14.23PCh. 14 - Prob. 14.24PCh. 14 - Prob. 14.25PCh. 14 - Prob. 14.26PCh. 14 - Prob. 14.27PCh. 14 - Prob. 14.28P
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- 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.arrow_forward13. As part of auditing equipment, the auditor will inspect new equipment additions selected from the client's property ledger. Thẻ procedure will provide evidence about which of the following assertions? a. Completeness b. Existence c. Valuation d. Rights and oblígations.arrow_forwardProvide a very clear and detailed introduction on the repossession procedure.arrow_forward
- List three reasons management may ask for an operational audit to be performed, and explain how the audit program would be impacted by each of them.arrow_forwardExplain the process of completing the field work of auditor?arrow_forward11. To test the effectiveness of controls over asset impairment, the auditor could perform which of the following procedures? a. Perform analytical procedures. b. Send confirmations to the management specialist who performed work related to the impairment. c. Inquire of management as to its process for determining assessment impairment. d. Inspect the asset for potential impairment.arrow_forward
- Direction: discussed the process of auditing the followingtransactions/accounts: b. Midstream and Downstream Sectors• Inventories• Property, plant, and equipment (PPE) c. Sector-Wide• Joint-Arrangements• Decommissioning costsarrow_forwardThe auditor selects a sample of asset disposals and examines the sales documentation evidencing disposal of the equipment and recomputes gain or loss on the disposal. This audit procedure primarily tests which of the following assertions for the equipment account? a. Presentation and disclosure. b. Rights. c. Valuation. d. Existence.arrow_forwardIn 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.arrow_forward
- Assertions and Substantive Procedures for Property, Plant, and Equipment (PP&E).Following are the four assertions about account balances that can be applied to the audit of a company’s PP&E, including assets the company has constructed itself: existence, rights and obligations, completeness, and valuation and allocation.Required:For each of the following substantive procedures, (1) cite one assertion most closely related to the evidence the procedure will produce (the primary assertion) and (2) when appropriate, cite one or more other assertions that also are related to the evidence the procedure will produce—the secondary assertion(s).a. For major amounts charged to PP&E and a sample of smaller charges, examine supporting documentation for expenditure amounts, budgetary approvals, and capital work orders.b. For a sample of capitalized PP&E, examine construction work orders in detail.c. For a sample of construction work orders, vouch time and material charges to…arrow_forwardWhat are the three major phases in the audit team's evaluation of internal control? How does the use of information technology affect the procedures performed in those phases?arrow_forwardIn order to help the audit team assigned to the audit of a major client's property, plant and equipment accounts better understand the link between auditing assertions and this area of the audit, the audit manager with overall responsibility for this part of the audit has convened a meeting. Which of the choices below would be the supervisor's best response to help explain this relationship? The easiest way to understand this relationship is to imagine taking our list of assertions, determining which ones apply to the client's property, plant and equipment accounts, and then finding ways to test the assertions we selected. For example, we might decide to test the valuation and allocation assertion by examining documents to see if the client has defaulted on any debt associated with these assets. The easiest way to understand this relationship is to imagine taking our list of assertions, determining which ones apply to the client's property, plant and equipment accounts, and then…arrow_forward
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