Your firm is auditing Rainbow Paints Ltd, a large manufacturer of painting products. You have been assigned
Question:
Your firm is auditing Rainbow Paints Ltd, a large manufacturer of painting products. You have been assigned the audit of property, plant and equipment (PPE) for the year ended 30 June 2014.
Rainbow Paints Ltd maintains a computerized fixed assets register. The company has three main classes of PPE: (1) Freehold Land & Buildings, (2) Manufacturing Machinery, Plant & Equipment, and (3) Motor Vehicles.
You are concerned that the depreciation rates for Motor Vehicles may be inadequate. You are also concerned that the recent revaluation of Freehold Land and Buildings by 20% is too high in the current economic climate.
Required:
For each management assertion listed in the table below, provide one substantive audit procedure specifically in relation to one of the above PPE accounts that would be used to gather sufficient appropriate audit evidence.
Auditing and Assurance Services
ISBN: 978-0077862343
6th edition
Authors: Timothy Louwers, Robert Ramsay, David Sinason, Jerry Straws