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for the aquamarine question is the following audit risk is the audit response appropriate:
audit risk: Aquamarine placed an order in April for $720,000 of new Plant and machinery, two-thirds of which is yet to be received.
There is risk that the remaining plant and machinery may not have been received at the year end and may have been included within the plant and machinery and hence being overvalued
audit response: Discuss with management whether the remaining plant and machinery has been received prior to year end. If yes, then confirm by reviewing ownership documents such as title deeds to confirm the asset has been received at the year end and is under the company’s name.
This doesn’t seem very different from the model answer – the only thing is that “title deeds” is a term that should be reserved for talking about property (in England, title deeds are recorded in a land registry). For a car, vehicle registration documents would be confirmation of ownership. For plant and equipment there is no “registration” – payment of the invoice would confirm ownership.
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