A4 M6 Other Transaction Cycles

Acquisition PP&E

Requires special requisition forms with descriptions and cost estimates approved by top management tied to the capital budget with board approval for large assets.

Subsidiary Ledgers PP&E

Maintains detailed individual asset records including descriptions identification numbers locations acquisition dates costs and depreciation details.

Physical Security PP&E

Includes identification plates matched to control accounts physical safeguards against theft and periodic physical inspections.

Written Policies PP&E

Requires written depreciation and capitalization policies to prevent revenue and expense misstatements.

Disposition PP&E

Uses sequentially numbered authorized work orders to record cash received remove assets and eliminate accumulated depreciation with segregation between authorization and custody.

Auditing PP&E Balance Completeness

Foots the fixed asset schedule agrees totals to general ledger and traces sample fixed assets to the subsidiary ledger.

Auditing PP&E Balance Valuation and Allocation

Recalculates accumulated depreciation reperforms impairment analyses and verifies fixed asset revaluations under IFRS.

Auditing PP&E Balance Existence

Vouches additions to requisitions invoices and physical assets and locates older assets from ledgers to detect unrecorded retirements.

Auditing PP&E Balance Rights and Obligations

Examines invoices deeds and title documents to confirm entity asset ownership.

Auditing PP&E Transactions Completeness

Traces requisitions to receiving reports and ledgers reviews repair and maintenance expenses for capitalizable items and checks lease agreements.

Auditing PP&E Transactions Cutoff

Reviews purchases and dispositions shortly before and after year-end for proper period recording.

Auditing PP&E Transactions Valuation Allocation and Accuracy

Recalculates depreciation expense and tests gains losses and accumulated depreciation removals on sold assets.

Auditing PP&E Transactions Existence and Occurrence

Vouches purchases to receiving reports and invoices and vouches dispositions to retirement forms.

Auditing PP&E Transactions Understandability of Presentation and Classification

Examines repairs and maintenance charges for capitalized items and verifies lease classifications as operating or finance.

Auditing Presentation and Disclosure Completeness PP&E

Ensures required disclosures for depreciation methods useful lives expense capital asset classes accumulated depreciation liens mortgages and leases.

Auditing Presentation and Disclosure Rights Obligations and Occurrence PP&E

Inquires of management and reviews loan agreements and minutes to verify pledged assets and compare disclosures to evidence.

Payroll Service Organizations

Considered part of the user entity information system when affecting transaction initiation execution processing or reporting.

Payroll Segregation Authorization

Assigned to human resources to hire employees and maintain personnel records containing pay rates and positions.

Payroll Segregation Supervision

Requires immediate supervisors to approve pay base data such as hours and time off.

Payroll Segregation Timekeeping and Cost Accounting

Accumulates hours worked or jobs completed independently using time clocks and supervisor comparisons of job tickets to clock cards.

Payroll Segregation Check Preparation

Computes salary and issues unsigned checks without authority to initiate rate changes or sign checks.

Payroll Segregation Check Distribution

Executed by an independent party like a paymaster who requires employee identification and investigates unclaimed checks.

Evaluating Payroll Internal Control

Observes segregation of duties compares personnel records to time cards observes unannounced payroll distributions and tests direct deposit transfers.

Auditing Payroll Accrual Valuation and Allocation

Recalculates year-end payroll accruals and compares calculated amounts to reported accruals.

Auditing Payroll Transactions Completeness

Traces a sample of time cards to the payroll register.

Auditing Payroll Transactions Cutoff

Compares sample time cards before and after year-end with the payroll report.

Auditing Payroll Transactions Valuation Allocation and Accuracy

Compares total payroll to check totals tests extensions checks pay rates recalculates net pay and compares costs to budgets.

Auditing Payroll Transactions Existence and Occurrence

Vouches payroll summaries to time cards and finds sample employees to verify current employment status.

Auditing Presentation and Disclosure Completeness Payroll

Ensures disclosures for pensions postretirement benefits stock compensation deferred compensation and profit-sharing plans.

Controls Over Debt

Requires documented financing agreements board authorization of new debt ledger reconciliations and controls over interest payments and premium or discount amortization.

Controls Over Equity

Requires board authorization for stock issuances dividend declarations and treasury stock purchases recorded in board minutes.

Stock Transfer Agent Controls

Employs an independent agent to handle issuances certificates and share records or assigns an officer without accounting duties to maintain the stock certificate book.

Auditing Debt Balance Completeness

Reviews board minutes obtains debt agreements traces debt from bank confirmations and confirms notes and bonds with creditors.

Auditing Debt Balance Valuation and Allocation

Examines debt agreements recomputes interest payable and recomputes premium or discount amortization.

Auditing Debt Balance Existence and Rights

Confirms notes or bonds with creditors and examines debt agreements to verify entity obligation.

Auditing Debt Transactions Completeness

Reviews interest expense payments for unlisted debt holders and checks lease agreements for proper classification.

Auditing Debt Transactions Understandability of Presentation and Classification

Examines due dates to classify debt as short-term or long-term.

Auditing Debt Presentation and Disclosure Completeness

Ensures disclosures for maturities interest rates call privileges pledged collateral five-year sinking fund requirements and covenants.

Auditing Equity Completeness

Uses third-party confirmations from stock transfer agents or inspects stock certificate stubs unissued certificates and treasury stock.

Auditing Equity Disclosures Completeness

Ensures disclosures for share counts security rights preferences option plans retained earnings restrictions and appropriations.

Auditing Equity Valuation

Recomputes values assigned to stock transactions and analyzes retained earnings entries from inception.

Auditing Equity Existence and Occurrence

Vouches current period transactions to board minutes stock transfer agent confirmations and stock certificate books.

Auditing Equity Understandability of Presentation and Classification

Determines retained earnings restrictions from loans or laws and inquires about appropriations.

Auditing Presentation and Disclosure (PP&E) Valuation Allocation and Accuracy

Reads footnotes and other information related to fixed assets to determine whether the information is accurate and presented at appropriate amounts.

Auditing Presentation and Disclosure (PP&E) Understandability of Presentation and Classification

Reads required disclosures for understandability.

Auditing Payroll Accrual Completeness

Tests the completeness of the payroll accrual when performing the search for unrecorded liabilities.

Auditing Payroll Accrual Existence

Vouches amounts from the client calculation of the payroll accrual to supporting documentation.

Auditing Payroll Accrual Rights and Obligations

Examines supporting documentation to verify that the payroll accrual is an obligation of the entity.

Auditing Payroll Transactions Understandability of Presentation and Classification

Examines a sample of paychecks for classification into the proper expense accounts.

Auditing Presentation and Disclosure (Payroll) Valuation Allocation and Accuracy

Reads footnotes and other information related to payroll to determine whether the information is accurate and presented at appropriate amounts.

Auditing Presentation and Disclosure (Payroll) Rights Obligations and Occurrence

Inquires about accruals for proper disclosure and compares disclosures to other audit evidence to ensure disclosed payroll information occurred.

Auditing Presentation and Disclosure (Payroll) Understandability of Presentation and Classification

Reads required disclosures for understandability.

Auditing Debt Transactions Cutoff

Reviews debt activity shortly before and after year-end to ensure transactions were reported in the proper period.

Auditing Debt Transactions Valuation Allocation and Accuracy

Tests a sample of debt receipts and payments and compares interest expense to the debt balance for reasonableness.

Auditing Presentation and Disclosure Related to Debt Valuation Allocation and Accuracy

Reads footnotes and other information related to debt to determine whether the information is accurate and presented at appropriate amounts.

Auditing Presentation and Disclosure Related to Debt Rights Obligations and Occurrence

Compares disclosures with other audit evidence to ensure that all disclosed information related to debt has occurred.

Auditing Presentation and Disclosure Related to Debt Understandability of Presentation and Classification

Reads required disclosures for understandability.