Table of Contents

Chapter 1 - Auditing Fixed Assets. 1

Auditor Objectives. 1

Auditing Characteristics of Fixed Assets. 2

Initial Fixed Asset Recognition. 3

Auditing Activities. 3

Inherent Risk Assessment 3

Material Misstatement Assessment 4

Fixed Asset Roll Forward Report 4

Substantive Procedures. 5

Vouching New Acquisitions. 7

Inspect Newly-Acquired and Older Assets. 7

Review Repair and Maintenance Expenses. 8

Verify Legal Ownership. 8

Investigate Legal Encumbrances. 9

Investigate Possible Impairments. 9

Conduct Analytical Procedures. 10

Review Presentation. 10

Internal Controls Used by the Client 11

Activities for an Initial Audit 13

Fraud Issues. 13

Review Questions. 15

Chapter 2 - Auditing Intangible Assets. 16

Intangible Asset Auditing Activities. 17

Goodwill 17

Goodwill Impairment 17

Goodwill Amortization. 19

Goodwill Auditing Activities. 19

Review Questions. 20

Chapter 3 - Auditing Depreciation. 21

Depreciation. 21

Straight-Line Method. 22

Sum-of-the-Years’ Digits Method. 22

Double-Declining Balance Method. 23

Units of Production Method. 25

Land Depreciation. 26

Land Improvement Depreciation. 26

Depreciation Accounting Entries. 26

Auditing Activities. 28

Review Depreciation Policies. 29

Test the Accumulated Depreciation Roll Forward Report 29

Test Depreciation. 29

Impact of Adjustments to Fixed Asset Accounts. 29

Activities for an Initial Audit 30

Fraud Issues. 30

Review Questions. 31

Chapter 4 - Planning the Fixed Asset Audit 32

Preaudit Work. 32

Requests for Client 32

Review Questions. 34

Answers to Chapter Questions. 35

Glossary. 40

Index. 42

Final Examination…………………………………………………………………………………………………...44