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

Which of the following audit procedures would be least likely to lead the auditor to find unrecorded fixed asset disposals?

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

Property,plant,and equipment is often a significant portion of a company's assets.Describe the inherent risk factors that can affect the audit of this account.

There are a number of important disclosure items to consider when auditing the property management process.List two.Where in the financial statements can some of the disclosures relating to property,plant,and equipment be found?

In testing for unrecorded retirements of equipment,an auditor most likely would

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

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

If the auditor has detected misstatements in prior audits,the assessment of inherent risk for the property management process will usually be set higher.

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

Which of the following situations has the best chance of being detected when a CPA compares revenues and expenses reported for the year being audited (current year)with the prior year and investigates all changes exceeding a fixed percentage?

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

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?

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

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

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

Determining that proper amounts of depreciation are expensed provides assurance about management's assertions of presentation and disclosure and

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

How do accounting standards regarding accounting for the impairment or disposal of long-lived assets affect the audit of property,plant,and equipment?

Which of the following constitutes a control weakness related to factory equipment?

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