Part (b) for 4 marks required substantive procedures the auditor should perform on year-end property, plant and equipment (PPE) additions and disposals. Performance was mixed on this part of the question.

There were two available marks for addition tests and two marks for disposal tests. Candidates who scored well often did so by providing a number of tests for each area, each test was average and so scored ½ mark each and so they managed to attain full marks in this way. However, some candidates provided detailed procedures and so achieved the 1 mark available per test. This is better utilisation of time.

The requirement verb was to “describe” therefore sufficient detail was required to score 1 mark per test. Candidates are reminded that substantive procedures are a core topic area and they must be able to produce relevant detailed procedures. Many tests given were just too brief.

Answers such as “check accounting records to ensure correct treatment of disposals” are far too vague as it does not explain how we gain comfort that disposals have been recorded correctly. In addition answers such as “ensure that additions are correctly included” are objectives rather than substantive procedures.

Other common mistakes made by candidates were: 
• Providing general PPE tests such as for depreciation, rather than just focusing on additions and disposals. 
• Giving unrealistic tests such as “to physically verify on the factory floor that an asset has been disposed of” if it’s been disposed of then how can it be physically verified! 
• Focusing too much on whether the asset has been disposed of for the best possible price; this is a concern of management and not of the auditor.