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Chap13auditing - working paper analysis and includes...

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Stephen Crouch Chapter 13 HW 1, 4, 5, 11, 13, 18, 20 1) PPE and includes all tangible assets with a service life of more than one year that are used in the operation of the business and are not acquired for the purpose of resale. 4) 3 internal controls of PPE: a. A subsidiary ledger consisting of a separate record for each unit of property. b. A system of authorizations requiring advanced executive approval of all PPE acquisitions. (Work orders) c. A reporting procedure assuring prompt disclosure and analysis of variances between authorized expenditures and actual costs. 5) Serially numbered capital work orders are a convenient means of recording authorizations. The extent is determined by the assessment of control risk. It includes a
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Unformatted text preview: working paper analysis and includes tracing of entries through the journals to the original documents. 11) Yes, it is adequate proof of ownership 13) The physical inspection may be limited to major units acquired during the year or may be extended to include tests of older equipment as well. If a complete inventory is needed, observation is required. 18) Auditors are to make a decision on the estimate of the useful lives of assets and then assess a depreciation method to it. 20) Auditors are to examine lease agreements to determine whether the accounting for the assets involved is proper. For example capital leases that are recognized as operating leases....
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