Your client, Schroeder Manufacturing Co., provided the following schedule of property, plant, and equipment for the year ended June 30, 2019. Balances have been agreed to the general ledger. As part of the audit, the in-charge has asked you to perform procedures related to testing additions to the accounts using data provided by the client. 

Download the PPEADDITIONS file (www.pearsonhighered.com/arens.com) from the textbook website and perform the following audit procedures using Excel, ACL, or IDEA. Document the steps followed for each procedure. A description of the codes and information contained in each column in the spreadsheet is included on the first tab. 

Required:

a. Foot the file of additions to property, plant, and equipment for the year ended June 30, 2019, by asset code (ASSETCD) and agree to additions according to the schedule provided above. What audit objective(s) is (are) satisfied with this audit procedure? 

b. Select all additions to the account greater than $25,000 for follow-up testing. How many items are identified and what is the total of the additions greater than $25,000? What further testing will the auditor perform for these acquisitions? 

c. Identify all additions to property, plant, and equipment that were a result of significant repairs and maintenance (ASSETCD = RM - ME) for follow-up testing. How many items are identified? What further audit procedures will the auditor perform for these items? 

d. Add an additional column to the spreadsheet and recalculate depreciation expense for each item. Schroeder uses straight-line depreciation, with a half-year convention (one-half year’s depreciation on all asset acquisitions and disposals during the year) and assumes zero salvage value. Document the results of the procedure and recommend follow-up if necessary. 

e. Verify the sequence of asset tag numbers used and identify any duplicates or gaps. What audit objective(s) is (are) satisfied by this procedure? Document the results of the procedure and recommend follow-up if necessary.

Transcribed Image Text:

6/30/2018 6/30/2019 Beginning Ending Account Description Balance Additions Disposals Balance Land $ 8,349,748 $ 8,349,748 Building Building/Land improvements Furniture fixture and equipment 2,984,783 45,093,983 $11,250,450 56,344,433 7,340,983 1,487,094 $432,121 8,395,956 159,530 36,598 3,107,715 Manufacturing equipment 8,992,436 2,509,418 667,145 10,834,709 Molds and tooling 1,239,867 240,732 44,987 1,435,612 Vehicles and computer equipment 1,034,784 Repairs and maint-Building Repairs and maint-Equipment 408,971 125,554 1,318,201 302,784 302,784 - | 192,783 71,196 263,979 $75,532,151 $16,127,391 $1,306,405 $90,353,137