Common Risks in the Audit of PPE

Risk	Possible Misstatement
A fictitious asset is recorded	PPE is overstated
A disposed asset remains in the register	PPE and accumulated depreciation are overstated
Repair costs are recorded as assets	PPE and profit are overstated
Major improvements are recorded as expenses	PPE and profit are understated
Depreciation is not recorded	PPE and profit are overstated
Incorrect useful life is used	Depreciation expense is incorrect
Asset purchased near year-end is recorded in the wrong period	Cut-off error
Company records an asset that it does not legally own	Rights and obligations issue
Revalued assets use an unreasonable valuation	PPE is misstated