Case Study Audit Of Property Plant And Equipment

INTRODUCTION
For this course which is Audit 1, I need to complete the case study, the topic that I have chosen is Audit of property, plant and equipment.
Property, plant and equipment are assets that have expected lives of more than one year, used by the company for business purposes, and are not acquired for resale. The purpose of using property, plant and equipment as part of the operation of client’s business and their expected lives of more than one year are the significant characteristics that distinguish these assets from inventory, prepaid expenses, and investments. The acquisition of property, plant and equipment occurs through the acquisition and payment cycle. To complete this task, I have chosen Lexington-Fayette Urban Country Government
Parks and Recreation Goal Courses maintain inventory of chemical suppliers for maintenance purposes. At the peak of golf season, inventory of chemicals used to maintain the greens may be valued at $10,000 at each golf course.
b. Division of Environmental Policy maintains an inventory of Lily rain barrels as part of the LFUCG Lily program. At 2011 year-end there was a total inventory valued at $18,792.
c. The West Hickman Water Treatment Plant maintains a stockroom of motors and chemicals valued at approximately $70,000 on the date of LFUCG’s visit.
d. The Division of Waste Management maintains a significant amount of refuse containers at the Furrows Building with an approximate value of $265,000 on the date on LFUCG’s visit.
e. Division of Streets Roads & Forestry maintains a stockroom in addition to the salt barn. The stockroom contained equipment parts, cement, tools, lubricants, special clothing, and various other items used in road repair work. The current total inventory has an estimated value of approximately $352,621 on LFUCG’s visit.
f. While conducting control of inventory, LFUCG noted that several divisions had segregation of duty issues regarding ordering, custody, tracking, distribution and security of inventory.

In-citation
This second finding effect the variances noted in LFUCG’s spot counts indicate improved tracking and control over portable assets and computer equipment is needed. While it is possible that poor recordkeeping is the cause behind that unaccounted for items, such items can be misappropriated if not routinely inventoried with variance between book and physical inventory promptly investigated and resolved. As noted in this second finding, a comprehensive CAO Policy should be developed that establishes government-wide requirements regarding fixed assets and other inventory. The policy should include instructions regarding the performance of annual physical counts by Divisions and requirements for reporting discrepancies between book and physical inventories to Accounting and responsible management for proper