Developing the Audit Plan for PPE

When planning the audit, the auditor should consider the nature and size of PPE transactions.

The uploaded slides emphasise three important planning considerations:

Factor	Why It Matters
Materiality	PPE amounts may be large enough to influence users' decisions
Inherent risk	Certain PPE transactions are more likely to contain errors or irregularities
PPE register	The register provides detailed information required for audit testing

Why Auditors Often Use a Substantive Approach

PPE purchases and disposals are usually infrequent but individually material. Therefore, auditors commonly focus on substantive procedures rather than relying heavily on tests of controls.

For example, instead of testing a large number of internal control activities, the auditor may directly inspect the invoice, approval documents and physical asset for a major machine purchased during the year.