the heightened risk of material misstatement. d. The auditor would perform all of the above procedures to respond to 9. Assume that a client's controls over recording retirements of long-lived tangible assets are not well designed. Which of the following procedures would the auditor plan to perform as a way of responding to the heightened risk of material misstatement? a. Select long-lived tangible assets recorded in the property ledger and locate them for inspection. b. Inspect long-lived tangible assets located at the client location and trace those assets to the property ledger. c. Review the tangible long-lived asset. property ledger to see if depreciation was recorded on cach tangible long-lived asset.

the heightened risk of material misstatement. d. The auditor would perform all of the above procedures to respond to 9. Assume that a client's controls over recording retirements of long-lived tangible assets are not well designed. Which of the following procedures would the auditor plan to perform as a way of responding to the heightened risk of material misstatement? a. Select long-lived tangible assets recorded in the property ledger and locate them for inspection. b. Inspect long-lived tangible assets located at the client location and trace those assets to the property ledger. c. Review the tangible long-lived asset. property ledger to see if depreciation was recorded on cach tangible long-lived asset.

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter12: Auditing Long-lived Assets And Merger And Acquisition Activity

Section: Chapter Questions

Problem 24CYBK

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Similar questions

46 The auditor should test for unrecorded retirements of properties by _______________. This procedure is relevant for validating the __________ assertion over the properties. Group of answer choices Tracing physical assets observed while conducting an ocular inspection to the records; completeness. Vouching items in the property records to the acquisition source documents; existence. Recomputing the depreciation charges on the properties; valuation. Selecting items in the property records and then tracing them back to the physical assets while conducting an ocular inspection of the properties, existence.
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
The auditing procedure that could least likely lead the auditor to find unrecorded property, plant, and equipment disposals isA. Vouching purchase invoices for asset additions.B. Review of voucher for the payment of property taxes.C. Review of miscellaneous income accountD. Review of loan agreement for fixed assets used as collateralE. None of them
For each of the following misstatements in property, plant, andequipment accounts, state an internal control that the client can implement to preventthe misstatement from occurring and a substantive audit procedure that the auditor canuse to discover the misstatement:1. Computer equipment that is abandoned or traded for replacement equipment isnot removed from the accounting records.2. Depreciation expense for manufacturing operations is charged to administrativeexpenses.3. The asset lives used to depreciate equipment are less than reasonable, expected useful lives.4. Capitalizable assets are routinely expensed as repairs and maintenance, perishabletools, or supplies expense.5. Acquisitions of property are recorded at incorrect amounts.6. A loan against existing equipment is not recorded in the accounting records. Thecash receipts from the loan never reached the company because they were used forthe down payment on a piece of equipment now being used as an operating asset. Theequipment…
Which of the following best describes why auditors audit leased assets in conjunction with the audit of property, plant & equipment? Multiple Choice (B & D are incorrect) A. Most leased assets should be capitalized. B. Repairs and maintenance expense is affected by leased assets. C. Management may choose to lease assets rather than buy them. D. Leased assets have a higher risk of misstatement.
In 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 them
1) The auditors analyze repairs and maintenance expense to: a)determine that plant & equipment accounts are not understated. b)determine that all maintenance items are recorded. c)determine that plant & equipment accounts are not overstated d)determine that maintenance expense amounts are authorized. 2)In auditing valuation of property, plant and equipment when its value is impaired, the auditors should: a)recalculate the depreciation expense on the item. b)recompute the net book value of the item. c)vouch the purchase of the item. d)evaluate the valuation model used for the item. 3)Which of the following best describes why auditors audit leased assets in conjunction with the audit of property, plant & equipment? a)Management may choose to lease assets rather than buy them. b)Leased assets have a higher risk of misstatement. c)Most leased assets should be capitalized.d)Repairs and maintenance expense is affected by leased assets. 4)Which of the following best…
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.
Assume that the client’s internal controls over the recordingand classifying of fixed asset additions are considered deficient because the individualresponsible for recording new acquisitions has inadequate technical training and limitedexperience 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 areexcellent? Be as specific as possible.
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.