The auditor selects and tests controls that are important to the auditors conclusion about whether the organizations controls adequately address the assessed risk of material misstatement for the long-lived asset accounts. The auditor selects both entity-wide and transaction controls for testing. Typical tests of transaction controls include inquiry of personnel performing the control, observation of the control being performed, inspection of documentation confirming that the control has been performed, and re-performance of the control by the auditor testing the control.

Below are control procedures relevant to long-lived assets. Match the control questionnaire (present on the left hand side) to its relating control procedure (present on the right hand side).

Does management periodically review asset disposal or the scrapping of assets as a basis for reviewing the assignment of estimated life for depreciation purposes? Does the client have a policy on minimum expenditures before an item is capitalized? If yes, what is the minimum amount? Does the client systematically review major classes of assets for potential impairment Does the client have a policy manual to classify property and assign an estimated life for depreciation purposes to the class of assets? Does the client have a mechanism to identify pieces of equipment that have been designated for scrap? If yes, is it effective? Method for designating scrap or idle equipment for disposal. Differentiate major renovations from repair and maintenance. Periodic physical inventory of assets Policy to classify equipment and compute depreciation. Systematic review for asset impairment