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Lesson 6 Non Current Assets

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12 views

Lesson 6 Non Current Assets

Uploaded by

Nguyễn Tùng
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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1

Lesson 6:
Non-current assets
2

What you will learn?

Overview

 Definition

 Related accounts

 Related supporting documents

Audit procedures

 Risk & Assertion Identification

 Audit procedures
3

Overview
1.1. DEFINITION

Assets

Current assets Non-current assets

Tangible non- Intangible non-


current assets current assets
4

Overview
1.2. RELATED ACCOUNT

Account 211:
Tangible fixed assets

Account 212:
Financial lease fixed assets

Account 213:
Intangible fixed assets
Related
accounts
Account 214:
Depreciation of fixed assets

Account 217:
Investment property

Account 241:
Construction in progress
5

Overview
1.3. RELATED REPORTING DOCUMENTS

GL of relevant accounts

Trial balance

Fixed asset register (FAR)


Documents
should be
obtained
Listing of construction in progress

Fixed asset stock take

Other source documents


6

Audit Procedures
2.1. RISK & ASSERTION IDENTIFICATION

Assertions Risk that may be incurred


 Recognize NCA when there is lack of necessary source
documents
Existence
 Recognize NCA when it does not meet all the
requirements

 Depreciation is not recorded correctly due to


recording on books wrong days compared with the
real life
Valuation  Record historical cost and useful life incorrectly
 Capitalizing interest expense, installment cost and
fixing cost before coming into use
 Devaluation NCA when not disposing yet

 Depreciation and amortization are not recorded on


related assets
 Extensions/totals in depreciation schedules are
Completeness
incorrect
 Asset backed securities and assets used as collateral is
not recorded
7

Audit Procedures
2.1. RISK & ASSERTION IDENTIFICATION

Assertions Risk that may be incurred

 Recognize NCA which is not completely transferred


for the company
 Recognize asset and depreciation/amortization
expense towards financial lease that the firm offer
to the outside party
Right &  Do not recognize asset and
Obligation depreciation/amortization expense towards
operating lease that the firm offer to the outside
party
 Do not recognize asset and
depreciation/amortization of financial lease that
the firm lease from the outside party

Presentation  Financial Statement does not disclose exactly the


& Disclosure figure on the schedule of fixed assets
8

Audit Procedures
2.2. AUDIT PROCEDURES

Typical Substantive Procedures and related assertions

Audit B/S
procedures E V C R/O P/D

Reconciliation X X X

Test addition X X X X X

Test disposal X X X X X

Recalculation X
9

Audit Procedures
2.2. AUDIT PROCEDURES

Detailed Typical Substantive Procedures

Accounts
Audit procedures
211, 213 214 241

GL with TB X

TB with Fixed asset


register (Both Opening
X X X
balance and Ending
balance)
Reconciliation
TB with 241 Listing X

Credit
Site visit
FAR after 214 with
Other reconciliation with 241
stock count debit
Listing
expenses
10

Audit Procedures
2.2. AUDIT PROCEDURES

Accounts
Audit procedures
211, 213 214 241
Take over material
Test addition transaction from GL X X X
and test
Write off Test Cr
fixed assets, 241 and
Include entry related
Test disposal other reconcile
to disposal
income from with Dr
fixed assets 211

Recalculation Depreciation X

Compare useful life of


Review useful FA per client with
X X
life regulation in Circular
45

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