Audit doc

1. Substantive Audit Procedures for property, plant, and equipment
1. Obtain a summary analysis of changes in property owned and reconcile to ledgers.
2. Vouch additions to property, plant, and equipment during the year.
3. Make a physical inspection of major acquisitions of plant and equipment.
4. Analyze repair and maintenance expense accounts.
5. Investigate the status of property, plant, and equipment not in current use.
6. Test the client’s provision for depreciation.
7. Investigate potential impairments of property, plant, and equipment.
8. Investigate retirements of property, plant, and equipment during the year.
9. Examine evidence of legal ownership of property, plant, and equipment.
10. Review rental revenue from land, buildings, and equipment owned by the client but
leased to others.
11. Examine lease agreements on property, plant, and equipment leased to and from others.
12. Perform analytical procedures for property, plant, and equipment.
13. Evaluate financial statement presentation and disclosures for plant assets and for related
revenue and expenses.
Audit of Plant Asset Related Accounts
1) Analyze Repairs and Maintenance Expense Accounts
Analyze repairs and maintenance expense accounts to:
a. Discover items that should have been capitalized
b. Use company policy to determine consistency in application
c. Analyze monthly amounts for significant variations from:
i. Month to month
ii. Between corresponding months of two years
2) Auditors’ Approach for Depreciation
The auditor should audit depreciation because it is an estimate that needs due consideration.
 Client makes
– Estimate of useful economic life
– Choice of several depreciation methods
 Audit approach for estimate
– Review and test management’s process of developing the estimate
– Review subsequent events or transactions bearing on the estimate
– Independently develop an estimate of the amount to compare to management’s
estimate