The auditor's starting point for verifying disposals of property, plant, and equipment is the
A) equipment account in the general ledger.
B) file of shipping documents.
C) client's schedule of recorded disposals.
D) equipment subsidiary ledger.

Question

Quizplus · Accepted Answer

The auditor should start by examining the client's schedule of recorded disposals, which is a listing of all disposals of property, plant, and equipment recorded in the general ledger. This schedule should be compared to supporting documentation, such as sales invoices or other sales agreements, to ensure that disposals were recorded accurately and completely. The auditor may also examine the equipment subsidiary ledger for further details on specific assets that have been disposed of. The file of shipping documents may be useful to confirm that the asset was shipped out, but it is not the starting point for verifying disposals. The equipment account in the general ledger may not provide sufficient detail on individual disposals.

The Auditor's Starting Point for Verifying Disposals of Property, Plant