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

Which of the following accounts would most likely be reviewed by the auditor to gain reasonable assurance that additions to the equipment account are not understated?

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

Which of the following is likely the most effective audit procedure for the verification of the legal ownership of real property?

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.

In verifying the amount of goodwill recorded by a client,the most convincing evidence that an auditor can obtain is by comparing the recorded value of assets acquired with the

Generally,auditors rely on controls when auditing the property management function and therefore less substantive testing is used.

The cutoff assertion for prepaid insurance

What tests do auditors typically perform on a lead schedule for property,plant,and equipment and what assertion are they testing?

Match each of the following intangible assets with its proper general category

Describe the types of information that should be included in the schedule of prepaid insurance that is used by the auditor as the basis for auditing prepaid insurance.

Auditors will examine the insurance register primarily to

Disposition of capital assets through sale,exchange,retirement,or abandonment are transactions that occur in the property management process.

In the examination of property,plant,and equipment,the auditor tries to determine all of the following except the

The controller of Excello Manufacturing,Inc.,wants to use ratio analysis to identify the possible existence of idle equipment or the possibility that equipment has been disposed of without having been written off.Which of the following ratios would best accomplish this objective?

In an interview with the plant manager regarding operations,the auditor is most likely to obtain evidence that raises concerns regarding

An auditor typically sets inherent risk for intangible assets at this level

For each of the following tests,state whether it is a test of details of account balances or a test of details of transactions.Then note for which property management assertion the test provides evidence. Test depreciation calculations for a sample of capital assets For assets written off,test amounts charged against income and accumulated depreciation Physically examine the capital asset additions Vouch transactions included in repairs and maintenance for items that should be capitalized Vouch significant additions and dispositions to vendor invoices or other supporting documentation Examine of confirm deeds or title documents for proof of ownership

Which of the following is the best evidence of real estate ownership at the balance sheet date?

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

Complex accounting issues for property,plant,and equipment include all of the following except