Auditing And Assurance Services
17th Edition
ISBN: 9780134897431
Author: ARENS, Alvin A.
Publisher: PEARSON
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Chapter 19, Problem 4RQ
To determine
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explain the process of auditing the followingtransactions/accounts below.
• Inventories• Property, plant, and equipment (PPE)• Renewal and reconditioning costs• Revenues• Rehabilitation bonds
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.
Listed below are several of the auditors’ general objectives in performing substantive procedures on an asset account:
Establish the existence of assets.
Establish that the company has rights to the assets.
Establish the completeness of recorded assets.
Verify the cutoff of transactions.
Determine the appropriate valuation of the assets.
Establish the clerical accuracy of the underlying records.
Determine the appropriate financial statement presentation and disclosure of the assets.
Required:
Indicate the general objective (or objectives) of each of the following audit procedures:
a. Observe the client’s physical inventory.
b. Locate on the client’s premises a sample of the equipment items listed in the subsidiary plant and equipment ledger.
c. Obtain a listing of inventory and reconcile the total to the general ledger.
d. Trace a sample of shipping documents to recorded sales transactions.
e. Identify related parties.
f. Vouch selected purchases of…
Chapter 19 Solutions
Auditing And Assurance Services
Ch. 19 - Identify three asset accounts, three expense...Ch. 19 - Explain the relationship between substantive tests...Ch. 19 - Prob. 3RQCh. 19 - Prob. 4RQCh. 19 - Prob. 5RQCh. 19 - Prob. 6RQCh. 19 - Prob. 7RQCh. 19 - Prob. 8RQCh. 19 - Prob. 9RQCh. 19 - Prob. 10RQ
Ch. 19 - Which documents will be used to verify accrued...Ch. 19 - Prob. 12RQCh. 19 - Prob. 13RQCh. 19 - Prob. 14RQCh. 19 - Prob. 15.1MCQCh. 19 - Prob. 15.2MCQCh. 19 - Prob. 15.3MCQCh. 19 - Prob. 16.1MCQCh. 19 - Prob. 16.2MCQCh. 19 - Prob. 16.3MCQCh. 19 - Prob. 17.1MCQCh. 19 - Prob. 17.2MCQCh. 19 - Prob. 17.3MCQCh. 19 - Prob. 18.1MCQCh. 19 - Prob. 18.2MCQCh. 19 - Prob. 18.3MCQCh. 19 - Prob. 19DQPCh. 19 - Prob. 20DQPCh. 19 - Prob. 21DQPCh. 19 - Prob. 22DQPCh. 19 - Prob. 24DQPCh. 19 - Prob. 25DQPCh. 19 - You are auditing the financial statements of...Ch. 19 - Prob. 27DQPCh. 19 - Prob. 28DQPCh. 19 - Prob. 29DQP
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- 13. 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_forwardThe auditor is MOST likely to learn of retirements of equipment through which of the following? a. Review of the purchase and allowance account. b. Review of the sales discount account. c. Analysis of the credits to the accumulated depreciation account. d. Review of insurance policy riders. e. Confirmation of recorded credits to the accounts payable account.arrow_forwardAs a financial auditor who is auditing long-lived assets, from the income statement, describe two accounts that become your concern and require further examination? Explain why it becomes your concern and explain what kinds of audit procedures you will use in order to further examination of that account?arrow_forward
- Apply your knowledge to perform audit procedures in the revenue and collection cycleand evaluate the findings of your tests.arrow_forwardMy question is on auditing where I want to know whether the audit evidence is sufficient and appropriate such as oral representation by management, year end suppliers statement and physical inspection of a non current assetsarrow_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. Oc O aarrow_forward
- Explain ANY FIVE (5) substantive procedures that an auditor should use in verifying the revaluation of plant, property and equipment in a particular company.arrow_forwardList the functions needs to be done on the part of auditor to verify freehold land and building of an auto company during the process of the audit?arrow_forwardIn the examination of property, plant, and equipment, the auditor tries to determine all of the followingexcept theA. Effectiveness of the internal control structureB. Authorization of property abandoned during the yearC. Presence of an insurance policy related to property, plant, and equipmentD. Availability of company’s depreciation policyE. None of themarrow_forward
- The 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 substantive procedures for a review of Rental Revenue from Land, Buildings, and Equipment Owned by the Client but Leased to Others, what procedures should the Auditor consider.arrow_forwardIn the audit of the financial statements, to determine the risks of material misstatement when planning the audit of the tangible fixed assets item, what types of information must the auditor collect? List audit procedures (at least 4 procedures) to collect sufficient and appropriate evidence as a basis for confirmation of tangible fixed assets.arrow_forward
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