Property, Plant and Equipment represent tangible assets acquired, built or under construction, with the intention of using them permanently, for the production or supply of other goods and services, to lease them or to use them in the administration of an entity. economic, which are not intended for sale in the normal course of business.
The financial auditor establishes the audit objectives and procedures to carry out the examination foreseen in the planning, this article aims to list which are said objectives and procedures for the evaluation of Property, Plant and Equipment in the organization.
Historical value
For the components of Property, Plant and Equipment, the historical value is determined by all expenditures and charges made by the company until they are ready for use.
Audit objectives
The examination carried out on this component of the balance sheet is based on two types of objectives, some of a general purpose and others of a specific type.
General
1. check the real existence of the assets listed by the company.
2. Verify the accuracy of the records of this component for all the assets that comprise it.
3. Analyze that the modifications of the Property, plant and equipment account have been duly registered.
4. Inquire if the items related to this item (depreciation, inflation adjustments, loss due to obsolescence, etc.) have been properly estimated.
5. Examine that the values corresponding to the company's Property, Plant and Equipment account are duly classified and shown according to their conditions.
6. Judge the correct valuation and registration of the P, P and E in the accounting books.
Specific
1. Determine the correct classification and presentation of fixed assets in the financial statements.
2. Determine the ownership or existence of any restriction on any of these assets.
3. Verify that these are registered correctly and in accordance with existing regulations.
4. Establish the physical existence of fixed assets.
5. Determine if the depreciation for the period is reasonable.
6. Determine if the necessary inflation adjustments were made correctly.
The correct valuation of the company's fixed assets depends on the examination carried out by the financial auditor of the Property, Plant and Equipment.
Audit procedures
1. Examine authorizations for purchases and sales or withdrawals of property and equipment
2. Examine the invoices of the suppliers and the settlements of the contractors for work performed, as well as other supporting documents of the disbursements made for P, P and E
3. Compare the works budgets or the authorized amounts for the construction, purchase or acquisition of property and equipment with the actual disbursements and verify if they coincide.
4. Analyze this item and reconcile its balance with the largest of property, plant and equipment
5. Physically check the existence of vehicles
6. Compare the result of the physical check with the major and of property, plant and equipment and investigate any irregularities
7. Physically check the existence of the properties, plant and equipment, failing that, make a selection according to the materiality criteria
8. Compare the result of the physical check with the largest of properties, plant and equipment and investigate any irregularities
9. Select the number of important purchase orders and compare their price with the quotes obtained.
10. Select a number of supplier invoices and check the entries of those in the respective control cards
11. Select a number of stock control cards and check if the shipments registered in them are covered by warehouse orders or by adjustment entries
12. Select a number of supplier invoices and compare them with the corresponding ones:
to. Purchase orders
b. Receipt tickets
Depreciation
This item must be examined very carefully and separately, taking into account that it must:
1. Analyze this item and reconcile its balance with the largest of property, plant and equipment.
2. Check if the basis for depreciation conforms to the legal provisions and the policy approved by the board of directors.
3. Verify the depreciation calculations.
