Exam 11: Auditing Inventoriand PPE

When performing tests of details of balancfor property, plant, and equipment, it is necessary for the auditor to review accumulated depreciation. Discuss what this review entails.

Ensuring that inventory transactions are recorded in the correct accounts is an example of the completeness assertion.

In companiwhere inventoriare at multiple locations, the auditor's observations ordinarily should include:

Confirmation of inventoriin public warehouscannot provide evidence concerning the:

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

The key issue in auditing inventoriis to ensure the inventoriactually exist, are owned, and are properly valued.

The auditor is least likely to discover unrecorded retirements of property, plant and equipment assets by:

When conducting tests of details of transactions for property, plant, and equipment, there are three typof 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 typof transactions.

When reviewing accumulated depreciation, the auditor seeks evidence as to the reasonableness, consistency and accuracy of depreciation charges. The substantive procedurperformed seek to provide evidence for which assertion?

The transactions relating to property, plant, and equipment are quite often few and usually individually material.

When the auditor receivthe client-prepared schedulfor 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:

List the procedurthat should be adopted in a physical inventory count.

Close to the end of the reporting period, the auditor needs to consider the extent of test counts relative to total inventory, and to review the recorded differencbetween test counts and inventory records over the year and the explanations of those differences.

When the client engagan inventory specialist to take the inventory, the impact on the audit in this area is:

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

Which of these factors contributleast to the risk of misstatement of inventories?

Ensuring that additions and disposals of property, plant, and equipment before the period end are recorded in the current period and those after the period end are included in the next accounting period is an example of the classification assertion.

Substantiating asset disposals with supporting documentation is a test of details of transactions. Which assertion is most likely satisfied?

When costing manufactured inventory all of the following procedurare necessary except:

A capital asset sub-ledger details individual items of plant and equipment and records the cost of each asset and of any additions or alterations, and the accumulated depreciation charged against it.