Exam 14: Auditing the Financinginvesting Process: Prepaid Expenses, Intangible Assets, and Property, Plant, and Equipment

If the ratio of insurance expense to related property, plant, and equipment is higher than expected, which of the following is a plausible explanation?

When there are numerous property and equipment transactions during the year, an auditor planning to set control risk at low usually plans to obtain an understanding of internal control and to perform:

Testing a sample of repairs and maintenance items to ensure that they were properly classified as repairs as opposed to property, plant, and equipment tests which of the following assertions for the property, plant, and equipment account?

Equipment acquisitions that are misclassified as maintenance expenses most likely would be detected by a control activity that provides for:

By selecting a sample of additions to property, plant, and equipment and then examining the related vendor invoices, the auditor is testing which of the following assertions for property, plant, and equipment?

List two ways an auditor can test the existence and completeness of insurance policies.

For each analytical procedure listed below, identify a potential misstatement in the property management accounts it could help find. a. Compute the ratio of depreciation expense to the related property, plant, and equipment accounts and compare to prior years' ratios. b. Compare monthly or annual repairs and maintenance with previous years. c. Compute ratio of insurance expense to the related property, plant, and equipment accounts and compare to prior years' ratios.

If a periodic physical inventory of property, plant, and equipment is taken, the individual responsible for the inventory should be independent of the custodial and record-keeping functions.