Unifactor provides equipment to the construction industry. The following is an extract of its unaudited 2019 financial

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Unifactor 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:Property, plant and equipment at cost 30 June 2016 (unaudited) $'000 176 250 30 June 2015 (audited) $'000

The auditor was appointed in November 2015. The new auditor is aware that there were major repairs conducted during the period commencing 27 April 2016 with an expected completion date of 30 July 2016. Discussions between the auditor and management of Unifactor indicate that there is a risk that Unifactor 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.

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Auditing A Practical Approach

ISBN: 9780730364573

3rd Edition

Authors: Robyn Moroney, Fiona Campbell, Jane Hamilton

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