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To obtain sufficient appropriate evidence that the property and equipment account are fairly stated, the
auditor should:
1. Be able to obtain a Transfer Certificate of Title in case of land, vehicle registration in case of
transportation equipment, or Progress Billings and Contract in case of building(Rights and Obligations
Assertion).
2. Be able to physically inspect the land, equipment or building from the Company's asset listing to floor
with the asset number appropriately and physically tagged to the asset(Existence Assertion).
3. Be able to attest that all liabilities incurred and accrued by the entity are recorded in the proper period
through testing of proper ownership of inventories purchased or through testing the adequacy of accrued
warranties expense (Completeness Assertion).
4. Be able to attest the adequacy of allowance for doubtful accounts recognized against the Bank's loans
receivable (in the case of banks and financial institutions) through impairment testing (specific and
collective impairment) or the adequacy of accumulated depreciation recognized against the property and
equipment account through test of reasonableness of depreciation expense account (Accuracy and
Valuation).
Audit assertions are quite difficult to grasp at first. However, once you apply these concepts in practice-you will eventually acquire an in depth understanding on the reason why we name such assertion as such
in the first place. You will realize the importance of these assertions in doing our audit engagements and
in answering theory-based cases and problems we might encounter in the Auditing Problems subject.