- This topic has 4 replies, 2 voices, and was last updated 1 year ago by
.
- Posts
During the audit, an asset that was purchased last year and is being depreciated over five years is found to be no longer in use as it has been damaged irreparably. which the following response should auditor conduct: request management to write down the asset to its recoverable amount, or request that the asset is written off completely, or request that the asset is disposed of.
I don’t understand why disposing of the asset is incorrect.
Welcome to my forum!
Short answer – that’s a management responsibility not an auditor responsibility.
Read from the top of page 33, the section …
“Auditor’s Responsibilities for the Audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement …”The financial statements will be misstated if assets are not stated at the lower of cost and recoverable amount – if material, the auditor would advise management that the financial statements are in need of correction. It is management who must adjust the financial statements – because it is their responsibility.
It is management who is responsible for decision-making – e.g. whether to buy/sell assets – not the auditor.
- The topic ‘I don’t understand why disposing of the asset is incorrect.’ is closed to new replies.