Chapter 13 Audit of Fixed Assets and Related Expense Accounts 审计学-基于环境变化的概念英文版教材.pptVIP

Chapter 13;Discuss Business Risk and Business Environment;What is earnings management?;Review Risks Associated with Fixed Assets and Related Expenses:;Amortization or depreciation which does not reflect the economic use of the asset Failure to recognize impairments in value Incorrect computation of gains/losses on asset disposal Improper recording of capital leases as operating leases Capitalization of costs that should be expensed;Explain Evaluating Control Risk and Control Effectiveness;Review Tests of Property Additions and Disposals;Review Disposals and Fully Depreciated Equipment;Comment on Asset Impairment;For the first approach, auditors perform a recoverability test to determine if asset is impaired. If future cash flows exceed assets carrying value, asset is not impaired If future cash flows do not exceed carrying value, asset is impaired. Amount of impairment is difference between net present value of future cash flows and assets carrying value For the second approach, the auditor may Obtain appraisal from independent and qualified appraisal firm Review current transactions to determine if there has been a decrease in purchase price;How are discontinued operations treated?;What’s different about first-time audits?;Discuss Depreciation Expense and Accumulated Deprecation;Comment on Intangible Assets;Review Handling Natural Resources ;Depletion should be based on amount extracted during the year Depletion is based on units of production approach Auditor may use analytics like current depletion compared to prior years Auditor may analyze production data and then recompute depletion May be difficult to estimate reclamation expenses Auditor should examine the reasonableness of procedures used by management to estimate cost;Discuss Leases: Audit Approach