Develop the Audit Program – Property, Plant, And Ref.

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Equipment Page: 1/2

Client: ORION HANEL PICTURE TUBE CO LTD Audit date: 31 Dec 2002

Financial Statement Assertions

Audit Objectives: E/O C R& V/M P&D
O
 All property, plant, and equipment on the balance sheet (including assets leased  
under capital leases) are held by the entity or by others for the entity.
 All property, plant, and equipment owned or leased under capital leases by the 
entity at the balance sheet date are included on the balance sheet.
 Property, plant, and equipment are carried at the appropriate amount (taking into 
account accumulated depreciation, depletion, or amortization). The cost of the
property, plant, and equipment is allocated to the appropriate accounting periods
in a systematic and rational manner. The undepreciated cost of the property,
plant, and equipment used in the business is expected to be recoverable through
future use. Impaired assets are recorded at estimated fair value. Property, plant,
and equipment held for disposal are carried at the lower of their carrying amount
or fair value less cost to sell.
 The entity owns, or has a legal right to, all the property, plant, and equipment on 
the balance sheet at the balance sheet date. All property, plant, and equipment are
free of liens, pledges, security interests, and restrictions or, if not, such liens,
pledges, security interests, and restrictions are identified.
 Property, plant, and equipment, and related accounts are properly classified, 
described, and disclosed in the financial statements, including notes, in
conformity with prescribed accounting principles.

Assertions:
Existence or Occurrence, Completeness, Rights and Obligations, Valuation or Measurement, Presentation and Disclosure

Audit Procedures to Consider

Assertions Auditor
addressed Check if
by the item is W/P Sign-
procedure applicable Ref. Off
E, C 1. Obtain or prepare a detailed roll-forward summary of property,            
plant, and equipment and related depreciation by major
classification. Test the clerical accuracy. Reconcile the total to
the general ledger control account(s) and to the appropriate sub-
ledger(s). Investigate significant reconciling items.
E, C 2. Obtain or prepare a schedule of asset additions (including capital            
leases) during the year. Compare the level of current-year
additions with prior years.
E, C, V, 3. For asset additions greater than 25% TE, examine supporting            
R&O
documents (purchase contracts, paid checks, vendors’ invoices)
to verify recorded cost. Challenge the estimated useful lives
assigned.
E, C, V 4. For asset retirements and dispositions with net carrying values            
greater than 25 TE%, examine supporting documents to verify
proceeds and determine that the appropriate cost and
accumulated depreciation were removed from the accounting
Date:

e
E&Y SMALL BUSINESS DOCUMENTATION Prepared by:

SB-19f (12-00) Develop the Audit Program – Property, Plant and Reviewed by:
Equipment
Develop the Audit Program – Property, Plant And Ref.:
Equipment Page: 2/2

Assertions Auditor
addressed Check if
by the item is W/P Sign-
procedure applicable Ref. Off
records. Recompute gain or loss.
E, C, V 5. Examine support for charges greater than 25% to repair and            
maintenance expense accounts for potential items that should
have been capitalized. Compare account balances with prior year
and investigate any unexpected changes (or the absence of
expected changes).
E, C, V, 6. Obtain or prepare schedules of lease and rent expense detail.            
P&D
Examine support for annual charges greater than      to determine
proper classification. Determine that any new leases have been
properly accounted for and that all relevant disclosures have been
made.
V 7. Perform analytical review procedures or detailed recomputations            
to test depreciation/amortization expense and tie the total
expense from the property summary to the general ledger
accounts.
V 8. Test the calculation of capitalized interest, if applicable.            
C, V 9. Consider physical verification of all or selected significant assets            
and determine asset recoverability/realization.
P&D 10. Ascertain that fixed assets are recorded properly in accordance            
with applicable accounting rules (e.g., FAS 121) and that
appropriate disclosure is made in the financial statements.
E, V 11. Review the property, plant, and equipment and related accounts            
in the general ledger and investigate any unusual items.
R&O, P&D 12. Review bank and debt confirmation replies, minutes, agreements,            
and other documents for evidence of liens, pledges, security
interests, and restrictions on property, plant, and equipment.
Determine that necessary disclosures are made.
13. Review the depreciation expense with that of previous year to            
ensure the consistence in application of depreciation rate over the
years and compliance with Circular 166.
14. Inquire the management approval for any change in depreciation
rate during the year, if any.
15.                  

Note: Step 3, 4, and 5 should used Micro Start and EY Random for selection of items to be tested

Date:

e
E&Y SMALL BUSINESS DOCUMENTATION Prepared by:

SB-19f (12-00) Develop the Audit Program – Property, Plant and Reviewed by:
Equipment