Substantive procedures
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substantive trials
for adding ups during the time:
For
Purchased Fixed Assets:
1. Gain a
list of all fixed benefits purchased through the period and agree with the set
assets agenda and fixed benefits record (entirety and occurrence).
2. Check approval
of the buy of fixed possessions.
3. Select a
sample of additions and agree on the cost to the supplier’s invoice. Also, scrutinize
invoices to confirm cost does not comprise income fixed cost(valuation).
4. Review
repair and maintenance accounts to verify repairs do not include capital expenditures. (completeness)
5. Inspect sale
deed, purchase invoices, and legal documents as evidence of transfer of
ownership in the name of the company. (rights and obligation)
For
self-constructed Fixed Assets:
1. Gain a
list of all set advantages constructed during the stage and concur with the
fixed property schedule and fixed property register (completeness and
occurrence).
2. Select an example
of costs and concur with behind documentation i.e.:
Site gaining costs to acquire invoice and lawful
papers/inspector’s report.
·
Materials (such as cement, bricks, fittings) to
suppliers’ invoices.
·
Labor costs to approved payroll records and timesheets
·
Overheads to relevant evidence
4. Physical
inspection of the construction at the year-end to confirm work to date and
assess the reasonableness of stage of completion.
5. Borrowing
costs associated with the project should be recalculated to ensure its
accuracy.
6. Ensure
that depreciation starts as and when assets become ‘available for use.
7. Review
expert's assessments to be compared with actual cost and significant
differences should be investigated.
Substantive
Procedures for disposals during the year:
I. Gain a list of all fixed property willing of during
the era and agree with the fixed property schedule and fixed property register
(wholeness and Occurrence).
II.
Check authorization of the disposals of fixed assets.
III. Check that cost and accumulated depreciation has been
removed from books of accounts.
1.
Review Fixed Assets' Register to
ensure:
·
Reduction has been charged on all depreciable fixed property.
·
Depreciation on adding up starts when the advantage is
available for use.
·
Fully devalue property are separately particular and
no reduction is charged on such property.
2.
Check whether the remaining value, useful
life/reduction rate, reduction method are:
·
Reasonable (considering nature of asset), and
·
Consistent with last time and manufacturing practice
and AFRF.
3.
Recalculate depreciation expense (using analytical procedures) and compare with
the actual expense to ensure the reasonableness of depreciation expense.
4. Check
whether the allocation of depreciation expense between manufacturing and
operating expenses is on a reasonable basis. 5. Review gain or losses on
disposal as an indication of possible understatement or overstatement of
depreciation expense. (if the reduction is sensible, there should not be important
gain or defeat).
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