Read the case. Then answer the questions based on it.

BACKGROUND:

As some assets, especially technology-related assets, become less valuable more quickly, clients may simply choose to discard the assets when replaced. However, because there is no consideration received, oftentimes clients will forget to record the entry removing the replaced asset from the books. As a result, as the new asset is recorded, the total assets are overstated, and, going forward, depreciation expense is also overstated as the disposed asset continues to be depreciated.

Johnson & George, CPAs is conducting a second-year audit on its client, Tough Stuff Manufacturing, Inc. Consistent with the policy disclosed in the prior year financial statements, technology and computer equipment is depreciated over five years. During its first year audit, J & G tested beginning balances and gained comfort on the Property, Plant, and Equipment balances. While auditing this year, the assistant controller offered to put a printer and scanner in the audit conference room since "they had so many extras lying around." In addition, he noted that most of the accounting personnel were printing to a new central station and almost everyone had a scanner on their desk. When auditing current year acquisitions there were many technology purchases in the current year but no record of the new central printer or the personal scanners.

1. Based on the information given, what three problems should have alerted Johnson & George that their audit approach probably needs to be modified? (You may list the three problem areas. For each one, be sure to comment on why this item could be a problem.)

2. Based on the information given, what equipment checks and other potential audit procedures should probably be added to J & G's auditing repetoire? You should have one procedure for each of the problems that you listed in #1