Listed below are several of the auditors’ general objectives in performing substantive procedures on an asset account:
1. Establish the existence of assets.
2. Establish that the company has rights to the assets.
3. Establish the completeness of recorded assets.
4. Verify the cutoff of transactions.
5. Determine the appropriate valuation of the assets.
6. Establish the clerical accuracy of the underlying records.
7. Determine the appropriate financial statement presentation and disclosure of the assets.
Indicate the general objective (or objectives) of each of the following audit procedures:
a. Observe the client’s physical inventory.
b. Locate on the client’s premises a sample of the equipment items listed in the subsidiary plant and equipment ledger.
c. Obtain a listing of inventory and reconcile the total to the general ledger.
d. Trace a sample of shipping documents to recorded sales transactions.
e. Identify related parties.
f. Vouch selected purchases of securities to brokers’ advices.