Bonsai Trading Co (Bonsai) manufactures electrical equipment, and its year end is 30 September 2015. You are the audit supervisor of Poplar & Co and are developing the audit programmes for the forthcoming interim audit.

The company’s internal audit department has provided you with documentation relating to the non-current assets cycle including the related controls listed below.

– Bonsai has a capital expenditure committee and all purchase orders for capital items are required to be authorised by this committee.

– On receipt, each asset is assigned a unique serial number and this is recorded on the asset and in the non-current assets register.

– When the asset arrives, a goods received note (GRN) is completed which details the nature of the expenditure (i.e. whether it is capital or revenue), and the GRN classification is reviewed and initialled by a responsible official. Copies of the GRNs relating to capital expenditure are then submitted to the finance department for updating of the non-current assets register.

– Periodically, internal audit undertakes a review of assets in the register and compares them to assets on site, using the serial number to confirm existence of the asset.

– Access to the non-current assets register is restricted through passwords to a small number of staff in the finance department.

Required:
Describe a test of control which the auditor of Bonsai Trading Co would perform to assess whether or not each of the non-current asset controls listed above is operating effectively. (5 marks)