1. Audit Field Standards: Audit of Fixed Assets
Pertemuan 12

2. Learning Objectives
Understanding Audit Field Standards of Audit of Fixed Audit
Understanding Internal Control of Fixed Assets
Understanding Audit Objectives of Fixed Assets
Being able to design Audit Procedures of Fixed Assets
Understanding of Documents (evidence) to support the record of Fixed Assets
Audit Evidence of Fixed Assets
Physical Examination Report of Fixed Assets
Some Frauds involving Fixed Assets
Examples of Audit Findings of Fixed Assets

3. The Internal Control Objectives of Fixed Assets
Fixed Assets purchased is to support the company’s operation
Fixed Assets are purchased with the best price
Fixed Assets are guarded and maintained properly
Depreciation expense is computed and allocated/recorded properly
Fixed assets are valued fairly
Fixed Assets disposed are them not used or not economical to be maintained.

4. Activities Need to be Examined
Acquiring of Fixed Assets whether purchased or manufactured
Disposal of Fixed Assets (whether sale or trade-in or scraped)
Repair and Maintenance
(revenue expenditure vs capital expenditure)
Depreciation and Allocation
Classification and Disclosure

5. Audit Procedures of Fixed Assets
are steps to be done sequentially to achieve the audit objectives of fixed assets.

6. Audit Objectives of Fixed Assets
Transaction Audit Objectives
Occurrence
Completeness
Accuracy
Cut off
Classification
Balance Audit Objectives
Existence
Right and Obligation
Valuation and Allocation

7. Audit Objectives of Fixed Assets
Disclosure Objectives
Occurrence
Right and Obligation
Completeness
Classification and Understandability
Accuracy and Valuation
(Boynton, Modern Auditing 8 edition)

8. Some of Documents (evidence) to support the record of Fixed Assets
Purchase Requisition
Feasibility Study of Purchasing Fixed Assets
Purchase for Quotation
Bid Evaluation
Purchase Order
Contract/Agreement Document
Progress Report or Receiving Report
Written policies of fixed assets
Ownership titles

9. Audit Evidence of Fixed Assets
Inquiries of the client
Documentation
Confirmation
Observation
Physical examination
Analytical procedures
Reperformance

10. Physical Examination Report of Fixed Assets
Getting the list of fixed assets at the date of physical examination
Fixed assets’ ownership certificates
Checking/computing the physics of fixed assets
Preparing Physical Examination Report
Tracing the physical examination results back to the balance sheet date
Making adjustment entry and disclosure necessary

11. Some Frauds in Fixed Assets
Over or under stating the value of fixed assets
Not disclosing fixed assets placed for collateral
Over or under estimating the economical life of fixed assets
Under or over computing the depreciation
Scrapping productive fixed assets
Capitalizing revenue expenditures
Not capitalizing capital expenditures
Ownership title is not on the name of company’s

12. Examples of Audit Findings of Fixed Assets
Assignment for students:
Write an hypothetical audit finding of fixed assets !
Condition
Criteria
Causes
Effects
Recommendation