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FIXED ASSET / CAPITAL ACQUISITION Fixed-assets (Errors and fraud could…
FIXED ASSET / CAPITAL ACQUISITION 
Audit Procedures
1) Account Balance Accuracy
-Auditor verifies the accuracy of the account balance
-Obtaining a detailed schedule on asset purchases and dispositions in the current period
2) Account Transaction Validation
-Have been received and actually exist in service
-Supporting documents such as vendors' invoices
-Physically examine the asset at the place
3) Asset Valuation Test
-Examining vendors' invoices and other purchase supporting documents
-Assessing the appropriateness of the asset depreciation
4) Asset Classification Test
-Helps ensure that the recorded are correctly classified
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5) Other Auditing Task
-Cover issues of asset ownership proof and reporting-cutoff-time test
-To prevent potential accounting manipulation from compromising financial statement reliability
-The auditor determines whether the fixed-asset transactions are reported in the proper period.
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Example of Analytical test: PP&E
1)Trend Analysis
- compare prior year balance for both PP&E and depreciation expense with what you see in the current year.
2)Ratio Analysis
- compare the ratio of insurance expense for the PP&E being insured to the prior-year ratio.
3)Feasibility
- a good procedure is to compare what the company budgeted to spend on PP&E with what it actually spent.
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