Audit Field Standards: Audit of Fixed Assets - PowerPoint PPT Presentation

Audit Field Standards:Audit of Fixed Assets

Pertemuan 12

• Understanding Audit Field Standards of Audit of Fixed Audit
• Understanding Internal Control of Fixed Assets
• Understanding Audit Objectives of Fixed Assets
• Being able to design Audit Procedures of Fixed Assets
• Understanding of Documents (evidence) to support the record of Fixed Assets
• Audit Evidence of Fixed Assets
• Physical Examination Report of Fixed Assets
• Some Frauds involving Fixed Assets
• Examples of Audit Findings of Fixed Assets

• Fixed Assets purchased is to support the company’s operation
• Fixed Assets are purchased with the best price
• Fixed Assets are guarded and maintained properly
• Depreciation expense is computed and allocated/recorded properly
• Fixed assets are valued fairly
• Fixed Assets disposed are them not used or not economical to be maintained.

• Acquiring of Fixed Assets whether purchased or manufactured
• Disposal of Fixed Assets (whether sale or trade-in or scraped)
• Repair and Maintenance

(revenue expenditure vs capital expenditure)

• Depreciation and Allocation
• Classification and Disclosure

are steps to be done sequentially to achieve the audit objectives of fixed assets.

• Transaction Audit Objectives
• Occurrence
• Completeness
• Accuracy
• Cut off
• Classification
• Balance Audit Objectives
• Existence
• Completeness
• Right and Obligation
• Valuation and Allocation

• Disclosure Objectives
• Occurrence
• Right and Obligation
• Completeness
• Classification and Understandability
• Accuracy and Valuation

(Boynton, Modern Auditing 8 edition)

• Purchase Requisition
• Feasibility Study of Purchasing Fixed Assets
• Purchase for Quotation
• Bid Evaluation
• Purchase Order
• Contract/Agreement Document
• Progress Report or Receiving Report
• Written policies of fixed assets
• Ownership titles

• Inquiries of the client
• Documentation
• Confirmation
• Observation
• Physical examination
• Analytical procedures
• Reperformance

• Getting the list of fixed assets at the date of physical examination
• Fixed assets’ ownership certificates
• Checking/computing the physics of fixed assets
• Preparing Physical Examination Report
• Tracing the physical examination results back to the balance sheet date
• Making adjustment entry and disclosure necessary

• Over or under stating the value of fixed assets
• Not disclosing fixed assets placed for collateral
• Over or under estimating the economical life of fixed assets
• Under or over computing the depreciation
• Scrapping productive fixed assets
• Capitalizing revenue expenditures
• Not capitalizing capital expenditures
• Ownership title is not on the name of company’s

Assignment for students:

Write an hypothetical audit finding of fixed assets !

• Condition
• Criteria
• Causes
• Effects
• Recommendation