Bac2664auditing L10 2 Non Current Assets

AUDITING BAC2664 (New), BAC2287(Old) Topic 10, Lecture 10 Audit of Fixed Assets (Non Current Assets) 1

Objective • Ensure fixed assets (non current assets) are fairly stated in the financial statements • Ensure movement of NCA - additions and disposals have been accounted for • Ensure proper cost – installation, freight or similar capital expenditure have been accounted for in respect of acquisition of assets 2

Audit Procedures Management assertions

Audit objectives Audit of test of details procedures of balances

Existence

Existence

Obtain FA listing 4 Agree relevant figures with GL 5 Carry out physical examination 6 Sight supporting documents (title deeds, registration cards, invoices, sales & purchase 3 agreement, minutes of BOD)

Audit Procedures Completeness

Completeness

From FA listing carry out physical examination

Valuation and allocation

Accuracy

4

5 6 7

8 9

Sight & Vouch entries in accounting records to supporting documents Ensure depreciation reasonably charged Ensure disposals authorized by BOD Ensure gain/loss on disposal properly accounted for in IS Trace proceeds to CB & Bank Statement Check appropriateness 4 of repair & maintenance expenses

Audit Procedures Classification

Different category of assets properly classified according to chart of accounts

Cut-off

3

4

Detail tie-in

Acquisition & disposal properly recorded Agree minutes of BOD meeting

Figures of FA tie with figures in GL 5

Audit Procedures Rights and obligations

Ownership

Presentation & disclosure

Presentation & disclosure

Sight title deeds, insurance policies, payment vouchers, vendor’s invoices, to ensure all documents belong to client 3

4

Present FA figures according to FRS requirement Make enquiries whether FA charged to bank as securities, & disclosed 6 adequately

References • • • • •

Lecture notes Tutorial questions Past examination questions Text – margaret boh – chapter Articles

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