Your firm is the auditor of Daybrook Insurance Brokers Ltd, which operates from a number of branches and provides insurance for the general public and businesses. The company obtains insurance from large insurance companies, and takes a commission for its services. You have been asked to audit certain aspects of the company’s fixed assets for the year ended 30 June 20X2.

The company’s main fixed assets comprise:

— freehold land and buildings;

— microcomputers, printers and related equipment which are used by staff; and

- cars which are provided to directors and salespeople who visit customers.

The company has been operating for a number of years, and it maintains details of its office equipment and cars on a computerised fixed asset register. The company uses the following depreciation rates:

— buildings (two per cent per annum on-cost);

— office equipment (including computers) (10 per cent per annum on-cost)

— motor vehicles (i.e. cars) (25 per cent per annum on-cost).

You are concerned that the depreciation rate for the computers may be inadequate.

Required

(a) How would you verify the ownership of freehold land and buildings, computers and cars?

(b) How would you determine that the depreciation rate on the various assets was adequate?