TrueBlue Ltd provides equipment to the construction industry. The following is an extract of its unaudited 2019
Question:
TrueBlue Ltd provides equipment to the construction industry. The following is an extract of its unaudited 2019 financial report in relation to the property, plant and equipment (PPE) account:
The auditor was appointed in November 2018. The new auditor is aware that there were major repairs conducted during the period commencing 29 April 2019 with an expected completion date of 30 July 2019. Discussions between the auditor and management of TrueBlue indicate that there is a risk that TrueBlue will capitalise all repair costs to minimise the impact on expenses.
Required
Explain how and why PPE would be at risk of misstatement if there is not good control over the treatment of repair costs.
Step by Step Answer:
Auditing A Practical Approach
ISBN: 9780730382645
4th Edition
Authors: Robyn Moroney, Fiona Campbell, Jane Hamilton