WP #

Audit of Property, Plant & Equipment

Description

This document is an audit program for property, plant & Equipment (fixed assets audit
program).

Revision Info

This program was last reviewed/updated on [Click to Insert Date here]

Step

Audit Procedure

Perfd/
Approved
By

Workpaper
Reference

BACKGROUND & PLANNING

1.

Obtain adequate background information on the audit

area such as:

General ledger account listing

Audit reports from other audit and/or compliance
groups
Productivity and performance measurement
reports/stats
Financial reports/statements
Policies & Procedures
List of information technology applications utilized
List of laws and regulations

2.

Review policies and procedures for completeness

verifying they at a minimum address compliance with
laws and regulations.

3.

Examine productivity and performance measures for

trends to assist in the developing audit scope.

4.

Review financial reports/statements for unusual

trends/fluctuations.
INFORMATION SYSTEMS

The following represents general information systems testwork to be performed if warranted

based on the risk posed by individual systems.
5.
Determine and list the primary information systems
utilized within the operations. Consider performing the
following testing based on the risk.
6.
Review the process for granting and terminating user
access. Perform detailed testing to determine if access is
terminated timely.
7.
On a sample basis, test specific user access to determine
if access is commensurate with job functions.
Additionally, determine if access promotes adequate
segregation of duties.
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WP #

Audit of Property, Plant & Equipment

Step
Audit Procedure
8.
Perform testing where necessary to determine if system
data is adequately backed up.
9.
Determine the nature and extent of system interfaces.
Review (perform testing of) interfaces to determine if
data is accurate, complete and timely. Also consider
whether there is a process to address interface errors.
10.
Determine the effectiveness of basic application controls.
Consider the following:
Does the system

Promote the use of strong passwords

Contain an appropriate audit trail
Contain adequate input validation controls
ANALYTICAL REVIEW

11.

Obtain an understanding of the accounting policies

relevant to property, plant and equipment and
depreciation. Obtain or prepare an analysis of those
accounts, including:
a) Description of accounts by classification.
b) Balances at beginning of period.
c) Additions and depreciation expense during the
period.
d) Disposals (e.g., assets sold, abandoned, written
off)
e) including related gain or loss and related
adjustments to
f) Accumulated depreciation during the period.
g) Balances at end of period.

12.

Test balances for reasonableness, fluctuations and

omissions.
a) Review the balances for reasonableness, expected
or unexpected fluctuations between periods and
obvious omissions.
b) Test mathematical accuracy of the analysis.

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WP #

Audit of Property, Plant & Equipment

RECONCILIATION
13.

a) Examine documentation (e.g., invoices, purchase

agreements, etc that supports property, plant and
equipment additions.
b) Examine documentation (e.g., bills of sale,
authorizations) that supports asset disposals and
related adjustments to accumulated depreciation.
c) Reconcile the analysis to detailed records of
property, plant and equipment.
DEPRECIATION

14.

Determine whether the depreciation practices followed

by the company are in conformity with GAAP and
consistent with the prior period (i.e. estimates of useful
lives and salvage values, procedures for the depreciation
of additions and retirements, etc )

15.

Identify fully depreciated assets carried in the property

records. Obtain assurance that such assets are still
utilized (i.e., that they have not been discarded or
abandoned).
CHARGES AND CREDITS

16.

Compare amounts charged against (e.g., write-offs, loss

on disposal) or credited to (e.g., gain on disposal)
income with income statement accounts. Investigate
significant differences.
REPAIRS & MAINTENANCE

17.

Review fluctuations the repair and maintenance accounts

for unusual fluctuations and, where appropriate,
examining charges to determine whether amounts should
be capitalized.
PHYSICAL INSPECTION

18.

Review the procedures for ascertaining the existence and

ownership of recorded assets. Consider the
independently testing the physical existence of and, if
appropriate, the title to property, plant and equipment.

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Audit of Property, Plant & Equipment

LEASED ASSETS
19.

a) Examine records of leased assets, lease

agreements and other relevant data for leases
capitalized during the period to determine
whether they were properly capitalized in
conformity with SFAS No. 13 (as amended).
b) Examine support for rentals under operating
leases to determine whether leases should be
capitalized in conformity with SFAS No.13 (as
amended).
BUSINESS CONTINUITY PLANNING

20.

If necessary, obtain and review the departments

business continuity plan. Determine if the plan
identifies, at minimum:

21.

Critical Business Processes

Applications & Systems
Process Dependencies
Process Recovery Procedures
Recovery Site Information
Contact Lists Including
o Employee Contact Information
o Department Notifications
o Vendor Notification
o Other Emergency Contact Numbers (Local EMS,
Fire, Police, Etc)

Determine if the plan is tested regularly. Obtain and

review the most recent testing documentation.
WRAP UP

22.

Notate all issues on the issue log.

23.

Submit workpapers for review.

24.

Clear review notes.

25.

Prepare draft report.

26.

Prepare final report.

27.

Return original client documentation.

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WP #

Audit of Property, Plant & Equipment

Step
Audit Procedure
28.
File workpapers (manual and/or electronic).

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