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    Property, plant and equipment accounts are often considered to have a low inherent risk of fraud. However, internal controls over these accounts may not be as effective when there are few transactions during the year. When there are few transactions, the continuing auditor will preliminarily review the related internal controls and perform thorough tests of the balances at the beginning of the year.

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    Property, plant and equipment accounts are often considered to have a low inherent risk of fraud. However, internal controls over these accounts may not be as effective when there are few transactions during the year. When there are few transactions, the continuing auditor will preliminarily review the related internal controls and perform thorough tests of the balances at the beginning of the year.

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    0 views41 pages

    Theories

    Uploaded by

    Silent Killer
    Property, plant and equipment accounts are often considered to have a low inherent risk of fraud. However, internal controls over these accounts may not be as effective when there are few transactions during the year. When there are few transactions, the continuing auditor will preliminarily review the related internal controls and perform thorough tests of the balances at the beginning of the year.

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    Property, plant and equipment is typically judged to be one of the accounts
    least susceptible to fraud because
    a. the amounts recorded on the balance sheet for most companies are
    immaterial
    b. the depreciated values are always smaller than cost.
    c. internal control is inherently effective regarding this account
    d. the inherent risk is usually low

    When there are few property and equipment transactions during the year,
    the continuing auditor usually makes a
    a. complete review of the related internal controls and assesses control
    risk relative to them
    b. preliminary review of the related internal controls and performs
    extensive tests of current year property and equipment transactions
    c. complete review of the related internal controls and performs analytical
    review tests to verify current year additions to property and equipment
    d. preliminary review of the related internal controls and performs thorough
    examination of the balances at the beginning of the year

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