WP #
Audit of Property, Plant & Equipment
Description
This document is an audit program for property, plant & Equipment (fixed assets audit
program).
Revision Info
This program was last reviewed/updated on [Click to Insert Date here]
Step
Audit Procedure
Perf’d/
Approved
By
Workpaper
Reference
BACKGROUND & PLANNING
1.
Obtain adequate background information on the audit
area such as:
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General ledger account listing
Audit reports from other audit and/or compliance
groups
Productivity and performance measurement
reports/stats
Financial reports/statements
Policies & Procedures
List of information technology applications utilized
List of laws and regulations
2.
Review policies and procedures for completeness
verifying they at a minimum address compliance with
laws and regulations.
3.
Examine productivity and performance measures for
trends to assist in the developing audit scope.
4.
Review financial reports/statements for unusual
trends/fluctuations.
INFORMATION SYSTEMS
The following represents general information systems testwork to be performed if warranted
based on the risk posed by individual systems.
5.
Determine and list the primary information systems
utilized within the operations. Consider performing the
following testing based on the risk.
6.
Review the process for granting and terminating user
access. Perform detailed testing to determine if access is
terminated timely.
7.
On a sample basis, test specific user access to determine
if access is commensurate with job functions.
Additionally, determine if access promotes adequate
segregation of duties.
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WP #
Audit of Property, Plant & Equipment
Step
Audit Procedure
8.
Perform testing where necessary to determine if system
data is adequately backed up.
9.
Determine the nature and extent of system interfaces.
Review (perform testing of) interfaces to determine if
data is accurate, complete and timely. Also consider
whether there is a process to address interface errors.
10.
Determine the effectiveness of basic application controls.
Consider the following:
Does the system
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Promote the use of strong passwords
Contain an appropriate audit trail
Contain adequate input validation controls
ANALYTICAL REVIEW
11.
Obtain an understanding of the accounting policies
relevant to property, plant and equipment and
depreciation. Obtain or prepare an analysis of those
accounts, including:
a) Description of accounts by classification.
b) Balances at beginning of period.
c) Additions and depreciation expense during the
period.
d) Disposals (e.g., assets sold, abandoned, written
off)
e) including related gain or loss and related
adjustments to
f) Accumulated depreciation during the period.
g) Balances at end of period.
12.
Test balances for reasonableness, fluctuations and
omissions.
a) Review the balances for reasonableness, expected
or unexpected fluctuations between periods and
obvious omissions.
b) Test mathematical accuracy of the analysis.
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WP #
Audit of Property, Plant & Equipment
RECONCILIATION
13.
a) Examine documentation (e.g., invoices, purchase
agreements, etc that supports property, plant and
equipment additions.
b) Examine documentation (e.g., bills of sale,
authorizations) that supports asset disposals and
related adjustments to accumulated depreciation.
c) Reconcile the analysis to detailed records of
property, plant and equipment.
DEPRECIATION
14.
Determine whether the depreciation practices followed
by the company are in conformity with GAAP and
consistent with the prior period (i.e. estimates of useful
lives and salvage values, procedures for the depreciation
of additions and retirements, etc )
15.
Identify fully depreciated assets carried in the property
records. Obtain assurance that such assets are still
utilized (i.e., that they have not been discarded or
abandoned).
CHARGES AND CREDITS
16.
Compare amounts charged against (e.g., write-offs, loss
on disposal) or credited to (e.g., gain on disposal)
income with income statement accounts. Investigate
significant differences.
REPAIRS & MAINTENANCE
17.
Review fluctuations the repair and maintenance accounts
for unusual fluctuations and, where appropriate,
examining charges to determine whether amounts should
be capitalized.
PHYSICAL INSPECTION
18.
Review the procedures for ascertaining the existence and
ownership of recorded assets. Consider the
independently testing the physical existence of and, if
appropriate, the title to property, plant and equipment.
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WP #
Audit of Property, Plant & Equipment
LEASED ASSETS
19.
a) Examine records of leased assets, lease
agreements and other relevant data for leases
capitalized during the period to determine
whether they were properly capitalized in
conformity with SFAS No. 13 (as amended).
b) Examine support for rentals under operating
leases to determine whether leases should be
capitalized in conformity with SFAS No.13 (as
amended).
BUSINESS CONTINUITY PLANNING
20.
If necessary, obtain and review the department’s
business continuity plan. Determine if the plan
identifies, at minimum:
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21.
Critical Business Processes
Applications & Systems
Process Dependencies
Process Recovery Procedures
Recovery Site Information
Contact Lists Including
o Employee Contact Information
o Department Notifications
o Vendor Notification
o Other Emergency Contact Numbers (Local EMS,
Fire, Police, Etc)
Determine if the plan is tested regularly. Obtain and
review the most recent testing documentation.
WRAP UP
22.
Notate all issues on the issue log.
23.
Submit workpapers for review.
24.
Clear review notes.
25.
Prepare draft report.
26.
Prepare final report.
27.
Return original client documentation.
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WP #
Audit of Property, Plant & Equipment
Step
Audit Procedure
28.
File workpapers (manual and/or electronic).
Page 5 of 5
Perf’d/
Approved
By
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Reference