In Auditing Property, Plant, and Equipment (PPE), Why Might the Auditor

question 15

Multiple Choice

In auditing property, plant, and equipment (PPE) , why might the auditor decide to assess control risk at the maximum and perform predominantly substantive testing?

• A) The number of additions to/disposals of PPE is usually not a material number. Therefore, it is not of concern to the auditor.
• B) PPE in total is material. All material balances should be tested using a substantive approach.
• C) The controls over PPE for most companies are usually poor.
• D) Because transactions relating to property, plant, and equipment are few and usually individually material, assessment of control risk relating to these transactions is usually assumed to be the maximum.