The following questions concern internal controls and tests for property, plant, and equipment. Choose the best response. 

a. An audit firm performs a preliminary review of the client’s internal controls over its property, plant, and equipment cycle. Which of the following would represent a weakness in internal control? 

(1) The purchasing department generates a special requisition form upon oral or written approval by senior management. 

(2) Assets that are retired are documented on a sequential work order, which includes an authorization signature. 

(3) A subsidiary ledger is used by the client to keep detailed transaction information for each fixed asset. (4) Each fixed asset has an identification plate that is listed on a control account. 

b. In searching for unrecorded retirements, an auditor selects older fixed assets from the subsidiary ledger and then tries to locate those assets. This procedure primarily relates to management’s assertion of 

(1) existence. 

(2) completeness. 

(3) rights and obligations. 

(4) classification. 

c. When auditing a client’s property, plant, and equipment transactions, which of the following tests of details can be used to support the existence and occurrence assertion? 

(1) Examine a sample of material charges to repairs and maintenance expense to determine whether any items should have been capitalized. 

(2) Vouch a sample of purchases to the vendor invoice and receiving report. 

(3) Recalculate any revaluation losses or surplus transactions made to property, plant, and equipment during the year. 

(4) Review fixed asset purchases and dispositions right before and after year end to determine whether recorded in the correct period.