You are an employee of Dick and Associates’ Auditing Firm. The company take on an engagement to audit Full Bright Company Limited. The engagement was divided into segments such as receivables, payables, cash and bank, inventories and non- current assets and each segment is headed by an audit senior. The audited of the non -current assets was assigned to you. After reviewing the financial statement, you re-cognized that non-current assets values 500 million and current assets values 400 million. A machine values 250 million was acquired by Full Bright Co. Ltd during the period under audit. You also noticed that the Depreciation on some of the assets were not calculated properly. The company did not keep a fixed asset registry. NB. The company has no Goodwill. a) Discuss at least four (4) audit procedures you would perform in completing your audit on the non-current assets. b) Will the machine that values 250 million be of any concern and if so, what are the steps you will take to satisfy the audit requirement. c) Is the fixed asset registry important? If yes explain. d) What advice would you give the management of Full Bright Co. Ltd. Regarding the correct calculation of depreciation. NB: Please answer question A,B,C and D

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter5: Professional Auditing Standards And The Audit Opinion Formulation Process

Section: Chapter Questions

Problem 39RQSC

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You are an employee of Dick and Associates’ Auditing Firm. The company take on an engagement to audit Full Bright Company Limited. The engagement was divided into segments such as receivables, payables, cash and bank, inventories and non- current assets and each segment is headed by an audit senior. The audited of the non -current assets was assigned to you. After reviewing the financial statement, you re-cognized that non-current assets values 500 million and current assets values 400 million. A machine values 250 million was acquired by Full Bright Co. Ltd during the period under audit. You also noticed that the Depreciation on some of the assets were not calculated properly. The company did not keep a fixed asset registry.

NB. The company has no Goodwill.

a) Discuss at least four (4) audit procedures you would perform in completing your audit on the non-current assets.

b) Will the machine that values 250 million be of any concern and if so, what are the steps you will take to satisfy the audit requirement.

c) Is the fixed asset registry important? If yes explain.

d) What advice would you give the management of Full Bright Co. Ltd. Regarding the correct calculation of depreciation.

NB: Please answer question A,B,C and D

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