Balance-Related Audit Objectives

These objectives focus on PPE balances reported at the end of the financial year.

Assertion	What the Auditor Wants to Confirm	Example
Existence	Recorded assets physically exist and are still in use	A vehicle listed in the PPE register can be physically inspected
Rights and obligations	The company owns the asset or has the legal right to use it	The company's name appears on the vehicle registration document
Completeness	All PPE used by the business has been included in the records	A newly purchased photocopy machine is included in the register
Valuation and allocation	PPE is reported at an appropriate amount	Depreciation has been calculated correctly

Important Distinction

Students frequently confuse existence and completeness.

Assertion	Direction of Testing	Purpose
Existence	Start from the accounting records and inspect the physical asset	To ensure recorded assets are real
Completeness	Start from physical assets and trace them to the accounting records	To ensure no assets have been omitted

Example

An auditor selects a machine from the PPE register and walks to the factory to inspect it.

• Assertion tested: Existence

An auditor walks around the factory, notices a new machine and checks whether it is included in the PPE register.

• Assertion tested: Completeness