Reference no: EM132768515

Question - You have been assigned to the audit of property, plant and equipment of Light Technology Ltd. The majority of their property, plant and equipment are computers. As the value of computers is material, you are concerned with the validity of the balances recorded. You become aware of the following:

Each computer is barcoded on installation and given to the accounting area by the IT department. IT department is responsible for ensuring all barcodes are accounted for annually.

Due to technological advancement in the computers, Light Technology's policy requires upgrading the computers every two years and the computers used for two years will accordingly be disposed by either scrapping or selling them to a third party. In your review of the fixed asset register, you noted that some computers are depreciated using useful lives of more than 2 years.

Based on your discussion with the fixed assets clerk, you are told that there is only one stocktake for the computers on hand at the end of year. The fixed asset register clerk told you that "he has no knowledge of what computers are currently being used by the employees of Light Technology."

Required -

1. Identify the one assertion for each of the situations.

2. List one procedure that you could use to audit the assertions identified in (a).