Your firm is auditing the financial statements of Newthorpe Manufacturing Ltd. for the year ended June 30, 2020. You have been assigned to the audit of the company’s property, plant, and equipment, which includes freehold land and buildings, plant and machinery, fixtures and fittings, and motor vehicles.

The freehold land and buildings were purchased 12 years earlier (in July 2008) for $2 million. At the date of purchase, a valuator estimated that the land and the buildings each had a value of $1 million. Depreciation has been charged since 2020 on the buildings at 2 percent per year on cost. At June 30, 2020, the accumulated depreciation is $200,000 before the revaluation.

A qualified valuator, who is not an employee of the company, valued the land and buildings at $5 million ($2.9 million for the land and $2.1 million for the buildings). These values will be incorporated into the financial statements as at June 30, 2020.

The partner in charge of the audit is concerned at the large increase in the value of the land and buildings since they were purchased. She has asked you to check the reliability and accuracy of the valuation. She suggested that CAS 620 Using the Work of an Auditor’s Expert could help you in carrying out this work.

In addition, you have been asked to verify the existence and completeness of plant and machinery recorded in the company’s computerized non-current asset register, which records the description of each non-current asset, the original cost, the depreciation charge, and the accumulated depreciation.

Required

a. Describe the audit work you will carry out to check whether the valuator has provided an accurate and independent valuation of the land and buildings.

b. Describe the audit work you will carry out to check the existence and completeness of plant and machinery, as recorded in the company’s fixed asset master file.