Page 49 - eBook Audit Of Financial Statement Components

This record is updated annually to record changes in the major

assets, particularly property, including details of title deeds and
registered charges such as mortgages. In a recurring engagement,

the auditor concentrates on the current year's transactions.

The opening balances are usually few. This contrasts with the
audit of current assets, which are subject to numerous

transactions and for which the audit effort is concentrated on the

closing balance. The auditor relies on the inspection of

documentary evidence in verifying additions and disposals, and
on mathematical evidence in verifying depreciation.

Audit of Property, Plant and Equipment

Audit Assertion Audit Procedures

Existence Vouch additional of PPE to purchase orders,
Right/obligation supplier’s quotations and invoices, and
goods received notes, to ensure that proper

authorization has been obtained for the
purchases.

Completeness Ensure disposals of PPE are properly
authorized and recorded in the books, and
that the proceeds are properly accounted
for.

Accuracy Ascertain the depreciation policy and test-
check calculations to ensure the
computation are correct.

Existence Carry out a physical inspection of the

material assets, where appropriate.

Classification Ensure that PPE are properly described
and disclosed in the financial statements.

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