Auditing

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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 property, plant, and equipment for the year ended December 31, 2020 The company's main property, plant, and equipment include: .freehold land and buildings computers, printers, and related eqfipment, which are used by staff 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 computerized fixed asset master file. The company uses the following depreciation rates: buildings (5 percent of cost per year) office equipment (including computers) (10 percent of cost per year) cars (25 percent of cost per year) You are concerned that the depreciation rate for the computers may be inadequate. How could the auditors verify the ownership of the freehold land and buildings, computers, and cars? Physically examine the land and buildings, Vouch additions to these accounts to supporting documentation. Check the title deeds and mortgage payment receipts. Examine the registration certificates and insurance policies. Review public records. Agree details of computer purchases to 'paid' invoices. Obtain an independent valuation of the capital assets. Physically examine the land and buildings. Vouch additions to these accounts to supporting documentation, Check the title deeds and mortgage payment receipts. Examine the registration certificates and insurance policies. Review public records. Agree details of computer purchases to 'paid' invoices. Obtain an independent valuation of the capital assets. How can the auditors verify the adequacy of the depreciation rates? Determine the reasonableness of the depreciation rates. Ensure depreciation rates are consistent with prior years. Review depreciation rates in comparable companies. Agree depreciation rates to those allowed for tax purposes as they should be the same. Examine losses on disposals over the past few years. Which of the following assist the auditor in substantiating additions and disposals for property, plant, and equipment? (Several choices may be correct.) Verifying the estimated useful lives and salvage values for the assets Physically inspecting major items and agreeing details of the assets to the documentation Calculating the amount of depreciation for the year Ensuring amounts capitalized include installation and freight costs Analyzing the miscellaneous revenue account for proceeds from sales One substantive procedure performed by the auditor is to scan individual charges in the repairs and maintenance account and look for unusual transactions or large amounts to ensure the amount was properly expensed. This procedure provides important evidence concerning the Completeness of the repairs and maintenance expense. Valuation of property, plant, and equipment. Completeness of property, plant, and equipment Existence of property, plant, and equipment