In: Accounting
The sample from the non-current asset subsidiary ledger of audit client has brought into focus the replacement of several material Property, Plant & Equipment (PPE) assets in use at several remote locations in Western Queensland. The PPE assets are very specialised in nature and had been individually engineered to specification and their operation is crucial to your client’s success. You consult with your engagement manager and partner and they decide it will be necessary to undertake an additional substantive procedure for these assets, having the assets inspected on location.
Solutions:
a) The requirement for quality control being illustrated by the audit supervisor seeking the advice of the manager and engagement partner is outlined in ISA 220 Para. A21-A22. It states that the engagement partner shall:
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Para. 17 also requires timely reviews by the engagement partner at appropriate stages during the engagement to allow significant matters to be resolved on a timely basis to the engagement partner's satisfaction on or before the date of the auditor's report.
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b) We address the assertion of existence when applying the additional substantive procedure of inspecting PPE additions on location.
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c) In the audit of PPE, the auditors can perform the following audit procedures to address the assertions: