PROPERTY, PLANT,

EQUIPMENT
SUBSTANTIVE AUDIT TEST (PROCEDURES)
1. Establish the beginning balance of
the PPE account.
For continuing auditor: Preliminary review of the
permanent-file work paper
For an incoming auditor: Referral to the
permanent-file work paper must be necessary,
or else, comprehension to the company’s
policies regarding PPE transactions
2. Trace the balances appearing on the FS
to the general and subsidiary ledger, with
both ledgers on an agreeing balances.
3. Examination of the current-period
PPE transactions
Vouch and schedule charges and additions
Acquisitions Construction Lease
Verification of Capital Expenditure authorization
Verification of purchase Verification from the Verification of the lease
agreements manufacturer-contractor contract
Examination of deed of
\ \
transfer (i.e. sale)
Vouch the contractor's
Vouch the seller's invoice,
billings, and other source
and other source \
documents
documents

Vouch the cancelled checks

Review and test calculations on cost allocation
Analysis of the Particulars and Journal Entry documentations
Vouch and schedule credits and disposals
Sale Exchange Retirement Return

Vouch
correspondenc
Verification of authorization
e and credit
memos

Vouch Sale/Exchange agreements,

invoices, cash receipts, and other \ \
supporting documents

Review and test calculations

Journal Entry documentations
Physical observation.
Analyse particulars in the related expense
accounts.
Examine data from non-current asset related
liability account.
4. Preparation or Verification of
Depreciation schedule.
Review of the company’s policy regarding
depreciation
Reconfirmation of the beginning balance of,
computation of provisions on, and recalculation
of the ending balance of, the accumulated
depreciation account
Journal entry documentations
5. Test of Impairment

Review and assess the management’s

approach in search of impairment indicator
Evaluate through an independent calculation
Journal entry documentation
7. Presentation and Disclosure

Refer to PAS 16
Sources:

 AUDITING: STANDARDS AND PROCEDURES, 9TH Edition; Holmes And Burns

 APPLIED AUDITING, 2016 Edition; Asuncion, Ngina, Escala
 PRACTICAL AUDITING, 2016 Edition; Empleo

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