Assertion Evidence for Property Transactions

Question 1

Assertions about Classes of Transactions - Occurrence

Answer 1

Vouch significant additions and dispositions to vendor invoices or other supporting documentation. Review lease agreements to ensure that lease transactions are accounted for properly.

Question 2

Assertions about Classes of Transactions - Completeness

Answer 2

Trace a sample of purchase requisitions to loading dock reports and to the PP&E records (i.e., transaction and master file).

Question 3

Assertions about Classes of Transactions - Authorization

Answer 3

Vouch a sample of PP&E additions to documentation indicating proper authorization.

Question 4

Assertions about Classes of Transactions - Accuracy

Answer 4

For assets written off, test amounts charged against income and accumulated depreciation.

Question 5

Assertions about Classes of Transactions - Cutoff

Answer 5

Examine the purchases and sales of capital assets for a few days before and after year-end.

Question 6

Assertions about Classes of Transactions - Classification

Answer 6

Vouch transactions included in repairs and maintenance for items that should be capitalized. Review lease transactions for proper classification between operating and capital leases.

Question 7

Assertions about Account Balances - Existence

Answer 7

Verify the existence of major additions by physically inspecting the capital asset.

Question 8

Assertions about Account Balances - Rights and obligations

Answer 8

Examine or confirm deeds or title documents for proof of ownership.

Question 9

Assertions about Account Balances - Completeness

Answer 9

Obtain a lead schedule of property, plant, and equipment; foot schedule and agree totals to the general ledger. Obtain detailed schedules for additions and dispositions of property, plant, and equipment; foot schedule; agree amounts to totals shown on lead schedule. Physically examine a sample of capital assets and trace them into the property, plant, and equipment subsidiary ledger.

Question 10

Assertions about Account Balances - Valuation and allocation

Answer 10

Evaluate fixed assets for significant write-offs or impairments by performing procedures such as 1. identify the event or change in circumstance indicating that the carrying value of the asset ay not be recoverable. 2. Verify impairment loss by determining the sum of expected future cash flows and comparing that sum to the carrying value. 3. Examine client documentation supporting impairment of write-off. Test depreciation calculations for a sample of capital assets.