Selected Preliminary Analytical Procedures

You will perform substantive audit procedures as you would during fieldwork of an audit engagement. You will document your substantive audit procedures as well as identify and describe problem areas in the audit by collecting and examining information and evaluating evidence. Complete the Fixed Assets Audit by performing the following:

Read: All audits require reading and research. Do the following:

Review the Planning and Internal Controls sections of the Apollo Shoes Case Study (Client File). Note any policies and procedures, BOD activity, and other information relevant to the Fixed Assets section of the audit.

Read the Fixed Assets section of the Apollo file.

Electronic Work Papers Page1

Create a new Excel Spreadsheet: To begin the process of performing the Fixed Assets Audit, you will need to create an Excel Spreadsheet using the Detailed Outline you created in Week 6 and adding the 2 spreadsheets in the Fixed Assets file attached (these come from the Client files on Fixed Assets). You should copy/paste the FA spreadsheets into your Detailed Outline.

Fixed Assets FA 1 & 2.xlsx

Read the following information about the tabs that should be included in the file:

Title/Cover Page:

Include

a tab called “Cover Page” and include cover page information

Your name

Assignment

Section

Etc.

All tabs from the Detailed Outline from Week 6: This would include the spreadsheets: Title, A-1, A-2, and TB (Rename B-1 Preliminary Analytical Procedures to TB). The TB should include all of the account balances for the current year and the prior year as well as the horizontal analysis. This should be a “revised” copy of the Comparative TB and should include revisions based on prior instructor feedback (Comparative TB and Detailed Outline assignments).

Tab FA-1/Roll-forward Lead: Utilize the 10K Roll-forward tab FA-1. Use the following information.

Utilize the proper three-line heading of an audit work paper.

Use the format illustrated provided in the spreadsheet.

Identify all of the balance sheet related fixed asset accounts from the Apollo Shoes Comparative Trial Balance (TB). Link the data from the TB into FA-1.

Create a line for each account you identify and include the following information from the TB

Account number.

Account name.

Beginning balance.

Ending balance.

There are no disposals so all of the activity throughout the year is attributed to additions.

Enter the difference between the Beginning and Ending balances in the Additions column.

Create a line to indicate the Gross Value of the Fixed Assets and use formulas to calculate a subtotal line.

Create a line to indicate the Net Book Value of the Fixed Assets and use formulas to calculate a total line.

Use formulas to calculate the horizontal analysis for the

Dollar difference.

Percent change.

Tab FA-2/Detailed Listing: Utilize the copy provided of the Prepared By Client (PBC) Detailed Listing Schedule found in the tab (from the Client File/Fixed Assets).

Substantive Audit Procedures: To audit Fixed Assets, perform the following:

Prepare and analyze the 10K Roll-forward Schedule (Lead Schedule)

Cross-reference the Ending Balances to the appropriate totals on the Detailed Listing.

Cross-reference the Additions to the appropriate totals on the Detailed Listing.

The only tickmarks on the Lead should be discussing the flux explanations.

All substantive audit procedures, testing, and additional documentation should be on the Detailed Listing w/p.

Perform substantive audit procedures on the Detailed Listing Workpaper

Reminder for PBC workpapers

You are auditing PBC’s, not fixing them.

Do not change numbers or “fix” anything on the PBC’s.

It is a PBC and must maintain its integrity with the following exceptions:

You may add rows and columns for tickmarks, cross-references, and other audit documentation.

You may change the formatting for font, font size, number (comma) format, etc.

Recalculate all of the depreciation expense values for all years and all items present based on Apollo Shoe’s policies and procedures as well as the requirements of US GAAP.

Cross foot the accumulated depreciation for each line item.

Foot the columns for each year.

In the cells under/following the Detailed Listing provided by the PBC, calculate totals for the various items necessary to cross-reference to the

Ending Balances on the Lead.

Additions on the Lead.

Include

The necessary intra-w/p cross-references on the Detailed Listing for these calculated items.

Formulas in all calculated cells

Underlines to indicate mathematical operations

Number (comma) formatting for all dollar values

All calculations, recalculations, and cross-references

Must be documented by the appropriate tickmarks (r, cf, f, or x-ref) under or to the right of the number, as appropriate for the t/m type.

Must match exactly (to the penny) to document the cross-reference. If they do not match exactly, prepare a reconciliation for the difference. If the difference is

Immaterial: Make the appropriate tickmark notation (i)

Material: Integrate knowledge from your financial accounting courses to fully analyze, discuss, and document the difference using both narrative discussion and computations through Excel formula calculations. If the difference is a client error, create a tickmark. Develop an approach to address it by documenting the requirements and rationale for the correction. Prepare an accurate and complete two-column journal entry to dispose of (correct) the issue.

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