Non-current Assets - Tangible

NotesQuizCBEMock

There are many things here.. cost, depreciation, additions, disposals and disclosures..hold tight!

Risks & Assertions

  • Completeness assertion
    Assets owned but not included in the FS

  • Existence assertion
    Assets in the FS don't actually exist (already sold or scrapped)

  • Valuation assertion
    Incorrect recording, valuations, or depreciation calculations

  • Rights and obligations assertion
    Assets in the FS not actually controlled by entity

  • Presentation and disclosure assertion
    Incorrect disclosures

Substantive tests for the Assertions

  • Completeness

    (Not so important, but test for understatement)

    • Get the NCA register (showing cost, additions, disposals, revaluations, impairments, depreciation)

    • Check the opening balances agree to FS P/Y

    • Check a sample of assets that definitely exist to the register

    • Check register to ledger balances

  • Existence

    Important check here for overstatement

    • Physically inspect a sample from the register

    • Check the sample assets are in use (and their current condition)

    • Investigate any assets not physically found

  • Valuation

    • Land and buildings Cost
      Check to purchase invoices
      Look for directly attributable costs (such as professional fees and delivery). 
      Check split between land, buildings and equipment

    • Equipment and vehicles cost 
      Check to the purchase invoices

  • Depreciation and impairment

    • Check rate used (type of asset / UEL & RV)

    • Ensure consistency of method used

    • Check accumulated depreciation on disposals has been removed correctly

    • Check depreciation on additions in year is pro-rata

    • Check for any indicators of impairment

    • Check arithmetical accuracy

    • Check any fully depreciated assets are no longer depreciated

    • Analytical procedures:   
      Ratio of depreciation to total asset value
      Compare totals to P/Y

    • Confirm adequate insurance cover

  • Rights and obligations

    • Land and buildings
      Inspecting legal documents, contracts & agreements

    • Vehicles
      Examine vehicle registration documents

  • Presentation and disclosure

    • Ensure they are correct and clear

    • Ensure the schedule of tangible NCA agrees to the figures in the FS

Substantive Procedures - Additions & Disposals

  • Additions

    • Get a list in your fist and ensure nothing's missed :)

    • Check authorisation for the additions

    • Check to total additions in FS

    • Check to invoice (in company name)

    • Physically inspect a sample

    • Ensure includes no items that should be in P&L (revenue items)

  • Disposals

    • Get a list in your fist and give it a kiss

    • Check authorisation of the disposals

    • Check cost and accumulated depreciation of disposals has been removed

    • Check calculation of profit/loss on disposal

    • Check accounting is correct

NotesQuizCBEMock