Part 1
Audit techniques are used to evaluate the honesty of monetary information provided by clients. The exact designs will vary with respect to clients, the nature of the entity, and the assertions which auditors want to verify. A complete audit structure is required to ensure the auditor has viable information to determine the client's credibility and taxable position. Plant, property, and equipment are the most critical items on a balance sheet but have a low risk of moderate. The three are often referred to as capital assets and include all tangible assets with a service life of more than one year. The investments are often used in business operations and are not acquired for resale. Fixed assets contribute to a significant proportion of the total assets of many companies, specifically those in the manufacturing sector. Auditing of fixed assets is therefore considered an important section of an independent financial audit. Despite the minimal number of transactions, the amounts involved in transactions will be high. This calls for an auditor to pay more attention while dealing with transactions related to fixed assets.
Audit Process
Adoption Stage
Distinct survey oversees comprehensive risk assessment by the end of each calendar year. The development of the audit plan of the following year is determined by the results of the previous year's judgment and the resources available at the department (Johnson et al., 2019). A set committee reviews the actual design accompanied by its implementation.
Delegate your assignment to our experts and they will do the rest.
Planning Stage
At the planning stage of each project, the internal probe staff come together and amass essential background details and start contact with the client. Surveyors meet with the clients to know the risks—determination of the objectives and scope of the audit and the fieldwork timing and report distribution.
Execution Stage
When the survey is planned, the internal audit staff proceed to execute the fieldwork. The tradesmen are informed about the process via orderly meetings. The survey observations, possible findings, and proposals are discussed with the tradesmen.
Reporting Stage
Probe findings are summarized, conclusions are made, with certain changes communicated formally to the tradesmen via a drafted review. Tradesmen are invited to respond to the information and hand in an implementation plan and time frame. The reactions are made part of the final report that is transferred to the appropriate admin level.
Follow-up
An internal probe follows up the survey findings within a year when the report was issued.
Part 2
Auditors are required to assess the fairness of the company’s depreciation provided to the assets. The rate is supposed to be consistent to the level where the fixed assets can consist of the company's income. Therefore, the audits should check the speed of depreciation against the rate given by the tax authorities or the county government. Land improvements, equipment, and machinery have fewer service periods and are subject to the law of depreciation. For instance, a house is built by a construction company, with the house as an asset that depreciates faster in its economic life. When depreciation is recorded, the depreciation is significant as the house’s value reduces. As such, the company's expense involved with the building will be realized with time as the house is in use. The depreciation expense account is debited with depreciation and credited with the aggregate account of depreciation. The accrued balance of depreciation will increase continuously as additional depreciation is summed to it until it is level with the asset's cost. When the cost is at zero, the expense of depreciation can no longer be taken into account.
Part 3
During the interim audit, the internal control system is kept and evaluated. This is a determinant of the test controls and procedures but will focus on the transactions in the period. At the final auditing, majority of the basis is on the monetary statements and the conclusions concerning capital, burden, and interests (Kuiler & McNeely, 2018). The auditor designs procedures to ensure the proper assertions have produced assurance.
Conclusions about categories of events and transactions about a period under audit
Occurrence - The transactions and events recorded have taken place, and the transactions related to the business entity.
Accuracy - The amounts and data concerning accounted dealings and events are correctly kept, and the close information has been carefully weighed and discussed.
Classification - Transactions and events have been recorded in the relevant accounts.
Absoluteness - All dealings and events that should be recorded are well detailed, and all related details that should constitute in the monetary statements are covered.
Cut-off - The correct accounting period has covered all events and transactions.
Presentation - Events and transactions are correctly detailed, and close informatics are understandable in the given context.
Assertions concerning ledger balances and related leaks at the period end
Obligations and rights - Entity hold the wealth, and debts are its obligations.
Reality - Assets, liabilities, and equity interests are tangible.
Absoluteness - All liabilities, assets, and dividends that should have been cited have been recorded, and the disclosures eligible for financial documentation have been counted.
Accuracy, allocation, and valuation - Liabilities, capital, and interests are all used in financial statements with correct figures, with violations or adjustments recorded carefully and the disclosures well described.
Classification - Assets, equity interests, and liabilities are all noted in the correct accounts.
Congregate - Liabilities, assets, and equity interests are well described, related publishing are apt and explicable in the requirements.
References
Johnson, R. N., Wiley, L., Moroney, R., Campbell, F., & Hamilton, J. (2019). Auditing: A Practical Approach with Data Analytics . John Wiley & Sons.
Kuiler, E. W., & McNeely, C. L. (2018). Federal big data analytics in the health domain: An ontological approach to data interoperability. In Federal Data Science (pp. 161-176). Academic Press.
