Property, plant and equipment can range from a low risk to a high risk audit area, depending on the nature of transaction and events engaged in by the reporting entity. Construction, capitalized interest, and complex leasing arrangements tend to result in higher risk of material misstatement. This module addresses tips and techniques for auditing tangible long-lived assets for various assessed risk levels, with a special emphasis on lease accounting under Topic 842.
Major Topics:
- Typical audit risks and responses for tangible long-lived assets
- Special issues related to initial recognition and capitalization, including capitalized interest
- Key controls related to PP&E
- Lease accounting requirements and practical application of Topic 842
Prerequisites
No Advanced Preparation or Prerequisites are needed for this course.
Designed For: Accountants responsible for auditing property, plant and equipment, including leases.
Learning Objective
- Discover and discuss typical audit risks and special audit considerations for tangible long-lived assets.
- Recognize and tailor a detailed audit plan to respond to assessed risk of material misstatement related to fixed assets and leases.
- Explore and explain key controls related to property, plant, and equipment.
- Discover and describe and apply lease accounting requirements, including the impact of Topic 842 lease accounting standard changes on both lessees and lessors.
Last updated/reviewed: June 10, 2024
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Jennifer Louis
CPA, President of Emergent Solutions Group LLC
INTRODUCTION AND OVERVIEW
- Learning Objectives and Introduction to Auditing PP AND E Including Leases Under Topic 842 3:36
- Typical Audit Procedures 12:08
- Capitalizing Cost and Related Depreciation Considerations 7:52
- Capitalized Interest and Special Considerations 12:56
- Key Controls 4:42
LEASE ACCOUNTING
- Overview of Lease Accounting per Topic 842 4:06
- Identifying a Lease Under Topic 842 4:38
- Criteria for Lease Classification and Resulting Accounting Under Topic 842 11:38
- More on the Details of Lease Classification 20:06
- Lessee Accounting 8:56
- Lease Modifications 4:06
- Lessor Accounting 6:30
CONTINUOUS PLAY
Supporting Materials
- Slides: Auditing PP&E, Including Leases under Topic 842 PDF
- Auditing PP&E, Including Leases under Topic 842 Glossary/Index PDF
REVIEW AND TEST
- REVIEW QUESTIONS quiz
- FINAL EXAM exam
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