13-35 The following are typical questions that might appear on an internal control questionnaire relating to plant and equipment:

1.Has a dollar minimum been established for expenditures to be capitalized?

2.Are subsidiary ledgers for plant and equipment regularly reconciled with general ledger controlling accounts?

a.State the purpose of each of the above controls.

b.Describe the manner in which each of the above procedures might be tested.

c.Assuming that the operating effectiveness of each of the above procedures is found to be inadequate, describe how the auditors might alter their substantive procedures to compensate for the increased level of risks of material misstatements.