ICAB & ICAEW: 225) : Worked Example: Non-Current Asset Assurance Engagement
ICAB & ICAEW: 225) : Worked Example: Non-Current Asset Assurance Engagement
Completeness
Peter will:
Obtain a schedule of non-current assets from the client
Agree the figures per the schedule to the financial statements and accounting records
(nominal ledger)
Compare the schedule to the asset register to ensure that the schedule reflects all the
assets owned by the company
Select a number of assets physically present on site and ensure that they are contained in
the asset register
Confirm the additions on the schedule are correct
Existence
Peter will:
Select a sample of assets contained in the asset register and verify that they are physically
present on site
Valuation
Peter will:
Confirm the cost or valuation of a sample of assets to purchase invoices or valuation
certificates
Confirm the brought forward depreciation levels of those assets (if relevant) to prior year
audit files or by reviewing the brought forward asset register files
Confirm the annual depreciation in respect of those assets is appropriate (by reference to
the accounting policy on depreciation published in the financial statements), and correctly
calculated (by recalculation or by using analytical procedures)
Review to ensure that depreciation has been correctly calculated on disposed assets, and
recalculate profit or loss on sale of those assets
5.Confirmation( This involves seeking confirmation from a This can be a very strong
a particular third party, e.g. confirmation from bank of procedure but there may be
form of inquiry) bank balances. instances where the third
party is motivated to
misrepresent, for example
an understated receivables
balance might be
confirmed because it
favoured the customer.
6. Recalculation Checking mathematical accuracy of client’s Recalculation is evidence
records, for example, adding up ledger created by the assurance
accounts. provider so is strong
evidence.
7.Reperformanc Independently executing procedures or Again, the fact that the
e controls, either manually or through the use of assurance provider carries
computer assisted audit techniques (covered out the performance of a
below). control himself makes it
strong evidence.
8. Analytical Evaluating and comparing financial and/or Evidence here is limited by
procedures non-financial data for plausible relationships the strength or weakness of
and investigating unexpected fluctuations. the underlying accounting
system. However, this can
be a strong procedure if
comparison is made to
items that do not rely on
the same accounting
system or that the
assurance provider can
corroborate outside the
accounting system.