Mayfair Construction is a new client of yours. Mayfair operates vehicles and machinery used in construction, farming, railways, and road transportation. Its equipment includes surface mining equipment, such as bulldozers, cranes, graders, and excavators. You have been assigned to audit its Heavy Equipment account that has a balance of $7,000, 000. This balance represents 200 pieces of equipment. The Accumulated Depreciation account has a balance of $2,000,000 and the Depreciation Expense for this year has a balance of $600,000. You are trying to prove that this $7,000,000 really does physically exist.

One objective of the auditor is to evaluate information to be used as audit evidence, including the results of audit procedures, to inform the auditors overall conclusion about whether sufficient appropriate audit evidence has been obtained. Complete the Matrix below

(8 Different activities) for Auditor Procedures for Construction Equipment.

WARNING: This is NOT a test of internal controls; This is NOT a test of cash; This is NOT a test of receivables or inventory!

Use the Power Point flowchart to decide how big your sample should be and what kind of Adjusting Journal Entry you must ask your client to prepare in order for its financial statement to be fairly stated.

From SAS 142 AU-C Section 500	Auditor Procedures for Construction Equipment (and related Depreciation)
Inspect records and documents (Report at least 4 procedures you would do)
Inquiry (Report at least 2 procedures you would do)
External confirmation (Report at least one procedure)
Inspection of tangible assets (Report at least one procedure)
Observation of processes or procedures (Report at least one procedure)
Recalculation (Report at least three procedures) (Report at least one procedure)
Re-performance of procedures (Report at least one procedure)
Analytical procedures (Report at least one procedure)