Non-Current Assets

Question 1

What are the key assertions?

Answer 1

• Existence
• Valuation
• Completeness
• Rights & Obligations

Question 2

What are the sources of evidence?

Answer 2

• Non-Current Asset Register
• Purchase Invoice, Physical Assets
• Ownership Deeds, Depreciation Policy
• Cash Book, Capital Expenditure Budgets

Question 3

What can you do with the non-current asset register?

Answer 3

• Obtain the non-current asset register, cast and agree the totals to the financial statements - completeness, classification & presentation.
• Select a sample of assets from the non-current asset register and physically inspect them - existence.
• Obtain a breakdown of disposals, cast the list and agree all assets have been removed from the non-current asset register - existence.

Question 4

What can you do with the physical assets?

Answer 4

• Select a sample of assets visible at the company’s premises and inspect the asset register to ensure they are included - completeness.
• Inspect assets for condition and usage to identify signs of impairment - valuation.

Question 5

What should you do for revalued assets?

Answer 5

Inspect the independent valuation report and agree the amount stated to the amount included in the general ledger and the financial statements - valuation.

Question 6

What can you do with purchase invoices?

Answer 6

• Obtain a list of additions and for a sample, agree the cost to suppler invoices - valuation.
• Select a sample of disposals and agree sales proceeds to supporting documentation such as sundry sales voices - accuracy of profit on disposal.

Question 7

What can you do with ownership deeds?

Answer 7

For a sample of assets included in the non-current asset register, inspect supplier invoices (for equipment), title deeds (for property) and registration documents (for motor vehicles) to ensure they are in the name of the client - rights & obligations.

Question 8

What can you recalculate?

Answer 8

• The profit/loss on disposal and agree to the statement of profit or loss - accuracy of profit on disposal.
• The depreciation charge for a sample of assets to verify arithmetical accuracy - accuracy, valuation.

Question 9

What can you do with the cash book?

Answer 9

Review profits and losses on disposal of assets disposed of in the year to assess the reasonableness of the depreciation policies - valuation.

Question 10

What can you reperform?

Answer 10

Perform a proof in total calculation for the depreciation charged for each category of assets, discuss with management if significant fluctuations arise - completeness, valuation.