Apollo Shoes Acc 556 Fixed Asset Substantive Procedures

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Fixed Assets Apollo Shoes recently moved into their new facility and acquired new equipment to facilitate their internal production. The new building was damaged by a hurricane in April, and Apollo Shoes had to repair and repaint it. With all of the recent additions, the emphasis in this area of the audit will be on the verification of current period fixed asset acquisitions. In addition, auditors must always consider the possibility that management may manage current- period earnings by manipulating fixed-asset accounts. For instance, management may apply some aggressive accounting practices such aggressive cost capitalization policies or extended amortizing periods. As a result, we selected the following substantive procedures to detect irregularities in the fixed assets audit cycle. Substantive Audit Program for Fixed Assets | Audit Procedures | Performed by | Refer. | Existence 1. Inquire of Apollo management about the existence of additions or disposals of property, plant, or equipment during the year; 2. Tour the client’s facilities, noting the addition of the product lines and new machinery as well as equipment that has been discarded; 3. Request a fixed asset roll-forward schedule. Trace the items to the entries in the property ledger; 4. Inquire of Apollo management about the existence of new leases during the year. | | | Completeness 1. Examine receiving reports. Determine that all items have been recorded in the correct time period (Rittenberg, Johnstone, & Gramling, 2010); 2. Examine vendor’s invoices of closely related accounts such as repair and maintenance account, as well as the lease expense account, to determine whether some items should have been capitalized; 3. Review lease and rental agreements. | | | Rights and Obligations 1. Inquire of Apollo management whether assets have been pledged as collateral; 2.

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