TAILIEUCHUNG - Lecture Auditing & assurance services (8e) - Chapter 14: Auditing the financing/investing process: Prepaid expenses, intangible assets, and property, plant, and equipment

After reading the material in this chapter, you should be able to: Know the various types of prepaid expenses, deferred charges, and intangible assets; understand the auditor's approach to auditing prepaid insurance and intangible assets; develop an understanding of the property management process; know the types of transactions in the property management process;. | Chapter 14 Auditing the Financing/Investing Process: Prepaid Expenses, Intangible Assets, and Property, Plant, and Equipment McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. Auditing Prepaid Expenses Other assets that provide economic benefit for less than a year are classified as current assets. Prepaid expenses are a common other asset. Examples include: Prepaid insurance. Prepaid rent. Prepaid interest. LO# 1 14- Substantive Procedures – Prepaid Insurance Tests of Details of the Prepaid Insurance Account Audit testing begins by obtaining a detailed schedule of the prepaid insurance account. Existence and Completeness Confirm policy with insurance broker, examine supporting source documents. Rights and Obligations Confirm policy beneficiary with the insurance broker. Valuation Determine unexpired Portion of policy and insurance expense. Classification Determine propriety of distribution between manufacturing overhead and SG&A expense. LO# 2 14- Auditing Intangible Assets Intangible assets are assets that provide economic benefit for longer than a year, but lack physical substance. The following list includes examples of five general categories of intangible assets: Marketing – trademark, brand name, and Internet domain names. Customer – customer lists, order backlogs, and customer relationships. Artistic – items protected by copyright. Contract – licenses, franchises, and broadcast rights. Technology – patented and unpatented technology. LO# 1 & 2 14- Substantive Procedures – Intangible Assets Tests of Details of Intangible Assets Tests of details associated with valuation and impairment of intangible assets are often necessary because the complexity and degree of judgment increase the risk of material misstatement. Some substantive evidence is required for all significant accounts, and, as noted above, substantive analytical procedures are not likely to provide sufficient, appropriate .

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• Auditing services
• Assurance services
• Financial statement auditing
• Auditing business processes
• Auditing internal control
• Auditing the financing
• Internal auditing services
• Internal auditing
• Auditing the purchasing process
• Auditing demands logic
• Financial statement auditing environment
• Auditing environment
• Audit planning
• Internal control
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