Kế toán, kiểm toán - Chapter 13: Property, plant, and equipment; depreciation and depletion

Property, Plant, and Equipment; Depreciation and DepletionChapter 13Audit Approach—Current AccountsVersus Noncurrent AccountCashSecuritiesAccounts ReceivableInventoriesAccrued LiabilitiesAccounts PayableShort-Term NotesProperty, Plant & EquipmentIntangible AssetsLong-Term LiabilitiesOwner’s Equity AccountsHigh turnover accountsAudit approach—audit the balanceLow turnover accountsAudit approach—audit the changesin the accounts2Controls Over Plant and EquipmentUse of a plant and equipment (capital budget)Maintenance of a subsidiary ledgerA system of authorizationsAnalysis of variances from budgeted expendituresA statement of policy distinguishing between capital and revenue expendituresA requirement that purchases of plant and equipment are subjected to normal purchasing proceduresPeriodic physical inventoriesA system of retirement authorization and documentation3Objectives for the Audit of Property, Plant and EquipmentConsider inherent risks, including fraud risks.Consider internal control over property, plant, and equipment. Determine the existence of recorded property, plant, and equipmentEstablish the completeness of recorded property, plant, and equipmentEstablish that the client has rights to the recorded property, plant, and equipmentDetermine that the valuation or allocation of the cost of property, plant, and equipment is in accordance with GAAPDetermine that the presentation and disclosure of property, plant, and equipment are appropriate45Substantive Tests of Property, Plant, and Equipment6Audit of IntangiblesAssets with definite useful lives are audited similar to property, plant and equipmentAssets with indefinite useful lives (e.g., goodwill) must be tested for impairmentAuditors generally rely on business valuation specialists to value goodwill for tests of impairment 7Impairment of Long-Lived AssetsLong-lived assets must be reviewed for impairment whenever events or changes in circumstances indicate that carrying value may not be recoverableTest involves projecting future cash flowsIf impairment is indicated by cash flows asset must be written down to fair valueMay require the use of a valuation specialist89