Any indication in the financial statement that illustrates Property, Plant, and Equipment comprises all the tangible assets with an active life in existence for more than a year and used in daily operations. When conducting an audit of the fixed assets, the auditors' substantive procedure aims include: substantiating the existence of the fixed assets and any action of linked transactions, determining the rights of the customers concerning assets, verifying the cutoff point of transactions affecting Property, Plant, and Equipment, establishing the comprehensive details of the fixed assets, establishing a precise valuation of the fixed assets, and evaluating the appropriateness of presentation and disclosure for the fixed assets. Deficiencies in the tabulation of Property, Plant, and Equipment often result in inaccurate fiscal reporting, hence the importance of controls over fixed assets.
The main controls over fixed assets entail the appropriate approval of acquisitions, a periodic physical inspection of the firm, sufficient records for the several divisions of property, and the application of serially totaled retirement job orders. The section of Plant, Property, and Equipment is generally considered inferior precedence by management, thus disregarded. Auditing for controlling the fixed assets processes is not often executed; however, Property, Plant, and Equipment are usually very substantial line substances on fiscal records (Payne, 2011). The Board of directors should embrace a fixed asset capitalization strategy, and the administrator must be constant with all processes concerning fixed assets. When conducting an audit for the fixed assets, the auditors should put much emphasis on testing the transactions that happened during the financial year, not necessarily the final balances. There should always be an accurate receipt and invoice authorization and posting of any Property, Plant, and Equipment purchase.
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References
Payne, E. A. (2011). Principles of Auditing & Other Assurance Services. Issues in Accounting Education, 26(2), 460. https://search.proquest.com/openview/9fbebb27c19ad3aa40da47ee87b96f73/1?pq-origsite=gscholar&cbl=31655
