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How to test the existence assertion for fixed assets additions or disposals?

The primary concern for the audit team is that the company says they purchased or disposed of fixed assets in their financial statements, but in reality, it never happened. This risk can be addressed by testing the existence assertion.

The audit team should request a list of all fixed asset additions or disposals, and then vouch the activity to the invoice or receiving report to verify the activity actually occurred. If possible, the audit team could observe the fixed asset.


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