AUDITING

BAC2664 (New), BAC2287(Old)

Topic 10, Lecture 10
Audit of Fixed Assets (Non
Current Assets)

1
 Objective
• Ensure fixed assets (non current assets)
are fairly stated in the financial statements
• Ensure movement of NCA - additions and
disposals have been accounted for
• Ensure proper cost – installation, freight or
similar capital expenditure have been
accounted for in respect of acquisition of
assets
2
 Audit Procedures
Management Audit objectives Audit
assertions of test of details procedures
of balances
Existence Existence Obtain FA listing
4 Agree relevant
figures with GL
5 Carry out physical
examination
6 Sight supporting
documents (title
deeds,
registration cards,
invoices, sales &
purchase
agreement, 3
minutes of BOD)
 Audit Procedures
Completeness Completeness From FA listing carry
out physical
examination

Valuation and Accuracy 4 Sight & Vouch entries

in accounting records
allocation to supporting
documents
5 Ensure depreciation
reasonably charged
6 Ensure disposals
authorized by BOD
7 Ensure gain/loss on
disposal properly
accounted for in IS
8 Trace proceeds to CB
& Bank Statement
9 Check appropriateness
4
of repair &
maintenance expenses
Audit Procedures
Classification Different category of
assets properly
classified
according to chart
of accounts

Cut-off 3 Acquisition &

disposal properly
recorded
4 Agree minutes of
BOD meeting

Detail tie-in Figures of FA tie with

figures in GL
5
 Audit Procedures
Sight title deeds,
Rights and Ownership insurance
obligations policies, payment
vouchers,
vendor’s invoices,
to ensure all
documents
belong to
client
Presentation & Presentation & 3 Present FA figures
disclosure disclosure according to FRS
requirement
4 Make enquiries
whether FA charged
to bank as
securities, &
disclosed 6
adequately
 References
• Lecture notes
• Tutorial questions
• Past examination questions
• Text – margaret boh – chapter
• Articles