1. Explain why the emphasis in auditing property, plant, and equipment is on the current period acquisitions and disposals rather than on the balances in the account carried forward from the preceding year. Under what circumstances will the emphasis be on the balances carried forward?
2. Explain why a proper cutoff of purchases and sales is heavily dependent on the physical inventory observation. What information should be obtained during the physical count to make sure that cutoff is accurate?
The reason the emphasis is on the current period for acquisitions and disposals is that the property, plant and equipment are permanent assets that are expected to be kept and maintained for several years.
In the event that it can't be shown that controls and substantive tests of transactions have been recorder for all disposals. There will be additional testing of the prior balance maybe required. Also, the first year audit requires ...
267-word examination of the audit processes for auditing property, plant and equipment. Also, the proper way to conduct an audit of cutoff of purchases and physical inventory is discussed.