2
Please see below the discussion questions for this week:
Question 1:
Ways in which long-lived assets can be fraudulently overstated include:
Fictitious assets on the books
Improper and incomplete depreciation
Failure to record impairment of assets, especially goodwill
Expired or worthless assets left on a company’s books
Assets overvalued upon acquisition, especially in the purchase of a company
Questions: (1a) What incentives might motivate management to overstate fixed assets?
(1b) What other factors should the auditor consider when assessing fraud risk related to long-lived assets?
Question 2: Explain why in some audit settings with long-lived assets auditors choose to perform only substantive tests of details, even though controls are designed effectively.
