《auditing审计学-基于环境变化的概念》sm_ch13

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1、SOLUTIONSFORCHAPTER13—AUDITOFFIXEDASSETSANDRELATEDEXPENSEACCOUNTSReviewQuestions:13-1.Managementcanmanageearningsthroughfixedassetaccountsby•Improperlyrecordingrepairsandmaintenancecostsasfixedassetsthatshouldbeexpensed.•Lengthentheestimatedusefullivesand/orreduceestima

2、tedresidualvalueofdepreciableassetswithouteconomicjustificationaswasdoneintheWasteManagementfraud•13・2.Themajorelementsofstronginternalcontrolsoverproperty,plant,andequipmentinclude:*Theexistenceofacomputerizedpropertyledger.Thepropertyledgershoulduniquelyidentifyeachas

3、set.Inadditionthepropertyledgershouldprovidedetailonthecostoftheproperty,theacquisitiondate,depreciationmethodusedforbothbookandtax,estimatedlife,estimatedscrapvalue(ifany),andaccumulateddepreciationtodate.*Authorizationprocedurestoacquirenewassets.Inparticular,theuseof

4、acapitalbudgetingcommitteetoanalyzethepotentialreturnoninvestmentisastrongcontrolprocedure.*Periodicphysicalinventoryoftheassetsandreconciliationwiththerecordedassets.*Formalprocedurestoaccountforthedisposalofassets.*Periodicreviewofassetlivesandadjustmentsofdepreciatio

5、nmethodstoreflectthechangesinestimatedusefullives.13-3.Eachaccounthasparticularauditrisks.Thepotentialproblemhereisthattheauditseniorhasassumedthatproperty,plant,andequipment(PPE)willbeeasytoauditthisyearbecauseithasbeeneasytoauditinpreviousyears.Itdoesnotappearthatthes

6、eniorhasassessedpotentialrisksthatmightbeassociatedwiththeaccount,norhavethepotentialrisksbeencommunicatedtothestaffauditor.WhileitistruethatPPEisnormallyalowriskauditarea,theapproachusedbytheseniorcanresultin"mindlessauditing11thatcanbedangerous.Ifauditriskislow,thesen

7、ioriscorrectthatauditingPPEisoneoftheeasiestaccountstoaudit.Butthereismoretovouchingadditionsanddisposals.Theauditormustdeterminethatnewassetsareproperlyclassifiedandsetuponanappropriatedepreciationschedule.Estimatesofcurrentyearrsdepreciationneedstobemade.Differencesbe

8、tweenbookandtaxdepreciationneedtobeidentified・Finally,theauditorshouldtakeatouroftheclientsfacilitiestonotewhe