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Auditing Exercise for Property Plant and Equipment - Assignment Example
Finance & Accounting
Pages 3 (753 words)
Subject: Finance and Accounting ( 7 minute presentation) The property management process entails the proper recording of all acquisitions and disposals. The company must implement common control activities for the relevant assertions related to property, plant and equipment…
Management must implement the internal control activities to reduce the three inherent risk factors, management must implement the following internal controls procedures. The same audit objective includes reducing the risk factors by physically determining if management recorded all assets seen and affirmed by the auditor properly and completely in the proper accounting period. The inherent risk factors for item 1 and 3 are complex accounting issues (proper recording of property plant and equipment assets and allowance for depreciation), difficult to audit transactions (collusion between management and employees to fraudulently present Enron-style financial statements), and misstatements (unintentional errors) are detected (Whittington, 2005). ADJUSTING ENTRIES The auditor found the recommended adjusting entries for item 1 item 3 and after performing the audit procedure test of details of transactions or reconciliation. This is in compliance the auditor’s meeting the audit objectives. The auditor must obtain sufficient audit evidence to support all management assertions shown in the financial reports. Reconciliation entails the ensuring that detailed records have the same balances as the general ledger control accounts. ...
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