In auditing property, plant, and equipment (PPE), why might the auditor decide to assess control risk at the maximum and perform predominantly substantive testing?
A) The number of additions to/disposals of PPE is usually not a material number. Therefore, it is not of concern to the auditor.
B) PPE in total is material. All material balances should be tested using a substantive approach.
C) The controls over PPE for most companies are usually poor.
D) Because transactions relating to property, plant, and equipment are few and usually individually material, assessment of control risk relating to these transactions is usually assumed to be the maximum.

Question

Quizplus · Accepted Answer

Transactions related to property, plant, and equipment are usually few, yet individually material. Therefore, the assessment of control risk relating to these transactions is typically assumed to be at the maximum, and the auditor must rely mainly on substantive testing to obtain enough audit evidence.

In Auditing Property, Plant, and Equipment (PPE), Why Might the Auditor