Property Plant and Equipment 1. EXISTENCE AND OCCURRENCE O: PPE in the balance sheet physically exists.

Addition (purchased, constructed, leased) and disposal (retired) P: Reconcile summary of PPE and analysis of Accumulated depreciation with Ledger o Beginning: Prior working paper (must agree with the ledger balance, sub and gen) o Addition and disposals: During audit o Audit adjustment is posted in the controlling account Physical Inspection of major acquisition of PPE o Appropriate if appears that theres weakness in the PPE IC

2. COMPLETENESS O: PPE include capitalizable costs and no capitalizable costs are expensed P: Vouch additions and investigate disposal o Test basis o Addition Purchased Vendors invoice Freight bills Constructed Material requisitions Labor time ticket Recomputation of overhead Capitalized interests o Disposal Remittance advise Validated deposit slips Bank statement o Examine minutes of the meetings of BOD o Purchase and Sale Agreements Indebtedness, Contingent liabilities and Restrictions

3. RIGHTS AND OWNERSHIP O: That the company has legal title or equivalent ownership rights to PPE in BS and related lease obligations of CAPITALIZED leased assets are recognized P: Examine evidence of legal ownership of PPE o Deeds o Transfer certificate of title o Insurance policy o Property tax bills o Operating lease confirm from 3rd party o Capital or Finance lease lease contracts Recompute minimum lease payments Appropriate capitalization rate o Machinery and equipment purchase invoice and contract of sale o Cars, trucks and delivery equipment certificates of title and registration documents Review rental revenue from PPE owned by client and leased to others o Account for all available rental space (vacant vs occupied by lessees) o Obtain floor plan and copies of lease contract o Rental revenue account versus lease agreement and cash records

4. VALUATION AND ALLOCATION O: Whether the PPE are stated at cost and allowances for depreciation and depletion are computed using an acceptable and consistent method P: Analyse repair and maintenance account o Capitalization of extraordinary repairs o Accuracy of repair and maintenance expenses Investigate status of PPE o Dismantled and unsuitable for operation written down to NRV and excluded from PPE o Temporarily idle need not be reclassified and still should be depreciated Test clients computation of depreciation Analytical procedures

5. PRESENTATION AND DISCLOSURE O: Whether the PPE are properly classified in the BS and relevant disclosures are adequate P: Balance shown by major class or in total Accumulated depreciation shown in major class or in total Required disclosures o Basis of valuation o Property pledged to secure loans inquire of legal counsel and bank confirmation for evidence of pledging. The extent of which the PPE have been pledged as security. o Property not in current use