Exam 16: Auditing Inventories and Property, Plant and Equipment

When conducting tests of details of transactions for property, plant and equipment, there are three types of transactions that need to be substantiated. These transactions are additions, disposals and repairs and maintenance. Briefly describe what is involved with substantiating each of these types of transactions.

ABC Ltd is a retailer who is planning to undertake a full inventory count at year-end. Control risk over inventory records for this entity is deemed to be:

During the observation of the inventory count, the auditor has no responsibility to:

When the auditor receives the client-prepared schedules for property, plant and equipment assets, in order to determine that they booked the adjustments proposed by the auditor at the conclusion of the prior audit, the auditor should:

Which of the following is not a function of maintaining inventory records?

Matters that should be considered by the auditor before reaching a conclusion about the reliability of an inventory count include all of the following except:

The statement about inherent risk assessments for property, plant and equipment that is inaccurate is:

1. What procedures might be useful to the auditor in determining if all disposals of property, plant and equipment have been recorded? 2.What procedures would be adopted by the auditor to gather evidence on the reasonableness, consistency and accuracy of depreciation charges (expense)?

If the auditor was testing inventory pricing the audit objective being fulfilled would be:

The application of analytical procedures to the audit of inventories is often:

The auditor is concerned that the client has committed a number of errors in the capital/repair expenditures distinction. In selecting items from the repairs expense account for investigation, the most appropriate audit procedure would involve:

Which of these is not true regarding substantive procedures for property, plant and equipment in an initial audit:

There are numerous factors that contribute to the risk of misstatement in the assertions for inventories and cost of sales. List four of these factors.

In companies where inventories are at multiple locations, the auditor's observations ordinarily should include:

The statement about audit strategy for property, plant and equipment that is inaccurate is:

When an asset is shown on the financial report other than at cost, which of the following is not required to be disclosed?

List the four separate functions of maintaining inventory records Identify the documentation used in each function to prevent inventory records from being manipulated.

Which of the following is not an income statement account related to property, plant and equipment?

What are the three audit strategy options that an auditor has for verifying the existence (and completeness) of inventories and what is the implication of each strategy for control risk?

Entities frequently maintain a plant register as a subsidiary ledger detailing individual items of PPE. Which of the following would an auditor not expect to find in a plant register?