Lesson: Auditing the Property, Plant, and Equipment Cycle

In this lesson, the focus is on auditing the Property, Plant, and Equipment (PP&E) cycle with an emphasis on segregation of duties and internal controls. The lesson delves into evaluating the process of requesting and purchasing fixed assets, reviewing authorization levels for asset purchases, examining processes for recording depreciation and disposals, and assessing the processes for physical inventory counts and preventing unauthorized asset access. To verify the existence of PP&E, techniques such as inspecting physical assets, checking for related purchase orders, and inquiring about ownership are discussed. Additionally, completeness and occurrence are examined through tracing, reconciling and analyzing various documents and processes. Lastly, the lesson explores efforts to ensure valuation, allocation, and accuracy, including comparison of depreciation calculations and tracing equipment records.