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CS Professional · Internal and Forensic Audit · Internal Audit of Specific Functions

During an internal audit of Kaveri Engineering Ltd., the auditor selects a machine from the fixed asset register and traces it to the shop floor to confirm it exists and is in use. Which audit objective is mainly addressed by this test?

The test addresses existence. Selecting an item from the fixed asset register and physically tracing it to the shop floor confirms that the recorded asset is actually present and in use. Completeness would require the reverse direction, from floor to register.

  1. ACompleteness of recorded fixed assets
  2. BExistence of recorded fixed assetsCorrect
  3. CAccuracy of depreciation rates
  4. DCut-off of capital expenditure

Explanation

Picking items from the register and physically verifying them tests that recorded assets actually exist. Testing completeness works in the opposite direction, from the floor to the register, so that option is wrong.

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