Audit Field Standards:
Audit of Fixed Assets
Pertemuan 12
Learning Objectives
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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
The Internal Control Objectives of
Fixed Assets
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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.
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
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Audit Procedures of Fixed Assets
are steps to be done sequentially to achieve
the audit objectives of fixed assets.
Audit Objectives of Fixed Assets
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Transaction Audit Objectives
 Occurrence
 Completeness
 Accuracy
 Cut off
 Classification
Balance Audit Objectives
 Existence
 Completeness
 Right and Obligation
 Valuation and Allocation
Audit Objectives of Fixed Assets
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Disclosure Objectives
 Occurrence
 Right and Obligation
 Completeness
 Classification and Understandability
 Accuracy and Valuation
(Boynton, Modern Auditing 8 edition)
Some of Documents (evidence) to
support the record of Fixed Assets
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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
Audit Evidence of Fixed Assets
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Inquiries of the client
Documentation
Confirmation
Observation
Physical examination
Analytical procedures
Reperformance
Physical Examination Report of
Fixed Assets
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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
Some Frauds in Fixed Assets
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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
Examples of Audit Findings of
Fixed Assets
Assignment for students:
Write an hypothetical audit finding of fixed
assets !
 Condition
 Criteria
 Causes
 Effects
 Recommendation