The auditor should perform detailed tests of labor charges when the client company constructs its own assets.

Question

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When the client company constructs its own assets, the auditor should perform detailed tests of labor charges to ensure that the labor costs incurred are properly identified and classified as direct or indirect costs, and are allocated to the appropriate construction project. This is important to ensure that the project is completed within the budget and on time, and to prevent any misstatement or fraud related to labor charges.

The Auditor Should Perform Detailed Tests of Labor Charges When