(Internal controls for plant assets) Harris, CPA, has accepted an engagement to audit the financial statements of Grant Manufacturing Co., a new client. Grant has an adequate control environment and a reasonable segregation of duties. Harris is about to assess control risk for the assertions related to Grant\'s property and equipment.
Required
Describe the key internal control structure policies and procedures related to Grant\'s property, equipment, and related transactions (additions, transfers, major maintenance and repairs, retirements, and dispositions) that Harris may consider in assessing control risk.
Solution
Grant manufacturing claims: Grant has an adequate control environment and a reasonable segregation of duties.
Property and Equipment - Policy for scraping of equipment, maintenance frequency, proper evironmental disposal. All to these are kep policy / information for the audit.
Additions and Transfers - Standard for receiving additions. Ensure that the standard has a seperation of responsibility from the receiving and purchasing processes.
Retirements and Dispositions - Looks at standard for when and how material and machines are scrapped. Is the salvage value accounted for correctly, etc.
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(Internal controls for plant assets) Harris- CPA- has accepted an enga.docx
1. (Internal controls for plant assets) Harris, CPA, has accepted an engagement to audit the
financial statements of Grant Manufacturing Co., a new client. Grant has an adequate control
environment and a reasonable segregation of duties. Harris is about to assess control risk for the
assertions related to Grant's property and equipment.
Required
Describe the key internal control structure policies and procedures related to Grant's property,
equipment, and related transactions (additions, transfers, major maintenance and repairs,
retirements, and dispositions) that Harris may consider in assessing control risk.
Solution
Grant manufacturing claims: Grant has an adequate control environment and a reasonable
segregation of duties.
Property and Equipment - Policy for scraping of equipment, maintenance frequency, proper
evironmental disposal. All to these are kep policy / information for the audit.
Additions and Transfers - Standard for receiving additions. Ensure that the standard has a
seperation of responsibility from the receiving and purchasing processes.
Retirements and Dispositions - Looks at standard for when and how material and machines are
scrapped. Is the salvage value accounted for correctly, etc.
