CPDStore Ireland

Tangible assets are often one of the largest figures on the balance sheet, yet audit work in this area is too easily treated as routine. Regulators and audit inspection teams repeatedly identify weaknesses in how firms test existence, ownership, valuation and impairment, and the revised requirements on auditing accounting estimates have raised the bar for testing depreciation, useful lives and revaluations. At the same time, economic pressures, volatile property markets and changing patterns of asset use mean impairment indicators are more common and more judgmental than ever.

This session takes a fresh and practical look at auditing tangible assets, moving beyond the standard checklist approach to focus on the areas where misstatements and inspection findings actually arise. You will come away with sharper procedures, better documentation habits and greater confidence in challenging management's judgements. For your practice, this means more efficient audit files that stand up to review. For your clients, it means an auditor who can engage credibly on capitalization decisions, revaluations and impairment.

Lungi Sepotokele will cover the following topics during this webinar: 

• Getting the foundations right: understanding the client's asset base, capitalisation policies, the boundary between capital and revenue expenditure, and risk assessment for tangible assets under ISA (UK) 315.
• Existence and ownership: designing effective physical verification procedures, testing additions and disposals, verifying title to land, buildings and vehicles, and dealing with assets held at third-party locations.
• Depreciation and useful lives as accounting estimates: applying ISA (UK) 540 to depreciation methods, rates and residual values, and challenging management's assumptions with appropriate professional scepticism.
• Valuation, revaluations and impairment: auditing revalued assets, using the work of management's experts under ISA (UK) 500 and auditor's experts under ISA (UK) 620, identifying impairment indicators and testing impairment reviews.
• Common pitfalls and documentation: frequent inspection findings, capital work in progress, fully depreciated assets still in use, componentisation issues, and evidencing your work to file review standard.

By attending this session you will:

• Understand how to build an effective, risk-based audit approach to tangible assets rather than relying on standard programmes.
• Be able to design and perform robust tests over existence, ownership, additions, disposals and physical condition.
• Learn how to audit depreciation, useful lives and residual values as accounting estimates, with documented challenge of management.
• Understand how to approach revaluations and impairment reviews, including when and how to use the work of experts.
• Be able to recognise and avoid the documentation weaknesses most commonly raised in cold file reviews and regulatory inspections.

The session will be of most interest to auditors at all levels who plan, perform or review audit work on tangible assets, from audit seniors and supervisors through to managers and responsible individuals. It will also be valuable to audit compliance and quality reviewers, and to accountants in practice who prepare financial statements and want to understand the standard of evidence and challenge their auditors will expect.

Course Level: Intermediate