Auditing Exercise for Property Plant and Equipment Assignment

Auditing Exercise for Property Plant and Equipment - Assignment ExampleManagement must implement the informal take in activities to reduce the three subjective risk factors, focussing must implement the following infixed controls procedures. The same audit objective accepts reducing the risk factors by physic altogethery determining if management enter all assets seen and affirmed by the auditor properly and completely in the proper write uping period. The inherent risk factors for tip 1 and 3 argon complex accounting issues (proper temperamenting of property form and equipment assets and allowance for depreciation), difficult to audit transactions (collusion between management and employees to fraudulently present Enron-style financial statements), and misstatements (unintentional errors) argon detected (Whittington, 2005). ADJUSTING ENTRIES The auditor found the recommended adjusting entries for item 1 item 3 and after performing the audit procedure test of details of t ransactions or reconciliation. This is in compliance the auditors face-off the audit objectives. The auditor must obtain sufficient audit evidence to support all management assertions shown in the financial reports. Reconciliation entails the ensuring that detailed records have the same balances as the general ledger control accounts. The following adjusting entries are necessary in order to present the true balances of the land account, buildings account, machinery and equipment account, depression outgo accounts, and allowance for depreciation account (buildings) and allowance for depreciation accounts (machinery and equipment), in compliance with no. 1 item instructions (D Kieso, J Weygandt, T Warfield, 2011). Item no. 1 Assertions 1. Completeness assertion Management ensures the recording of all existing property, plant, equipment, allowance for depreciation and other accounts in the same accounting period. The accountant did not record the donated assets were in the books of accounts received from Crux City. Thus, the power on the audit procedure is to increase the building account in item no. 1by $ 400,000. Management must make an adjustment. Otherwise, item no. 1 (building account) result be understated. Likewise, the allowance for depreciation account, item 1, will be understated. 2. Existence or Occurence assertion altogether recorded property, plant, equipment, allowance for depreciation and other accounts exist or are owned by the connection in the same accounting period. The effect on audit procedure is to inspect the official documents that include land titles, official receipts, and donation document will prove the reality or occurrence (ownership) of the account assets. 3. Valuation or allocation assertion all amounts recorded in the property, plant, machinery and equipment, allowance for depreciation accounts are accurate and proper classification of the business transactions are made. The audit procedure includes analytical procedures . The effect on audit procedure is to ensure accuracy, classification, cut-off, detail tie-in of the property, plant, equipment, depreciation allowance, and depreciation expense balances during the grade under audit. In terms of effect on audit procedure, the auditor must determine the existence or occurrence assertion audit assertion are valued accurately by in person inspecting if all recorded property, plant, and equipment accounts recorded in the books exist (Whittington, 2005). The building, machinery and