Audit of PPE Additions

When checking new PPE purchases, the auditor should inspect:

Audit Evidence	Purpose
Purchase invoice	To verify the purchase price
Purchase agreement	To confirm the terms of the purchase
Payment records	To confirm that payment was made
Board approval	To confirm authorisation for major purchases
Physical asset	To confirm existence
PPE register entry	To confirm the asset was properly recorded
Depreciation calculation	To check whether depreciation begins at the correct time

Example

A company purchases a new machine for RM250,000.

The auditor should:

1. Inspect the supplier's invoice.
2. Check the authorised purchase order.
3. Trace the payment to the bank statement.
4. Inspect the machine physically.
5. Check the asset tag and serial number.
6. Trace the machine to the PPE register.
7. Recalculate depreciation.