Auditing PP&E, Including Leases under Topic 842 – Digesting the Risks of Improper Treatment of Tangible Long-Lived Assets

Learning Objectives

• Discuss typical audit risks and special audit considerations for tangible long-lived assets.
• Tailor a detailed audit plan to respond to the assessed risk of material misstatement related to fixed assets and leases.
• Explain key controls related to property, plant, and equipment.
• Describe and apply lease accounting requirements, including the impact of Topic 842 lease accounting standard changes on both lessees and lessors.

Course Description

Property, plant, and equipment can range from a low-risk to a high-risk audit area, depending on the nature of the transaction and events engaged in by the reporting entity. Construction, capitalized interest, and complex leasing arrangements tend to result in a higher risk of material misstatement. 

This Course addresses tips and techniques for auditing tangible long-lived assets for various assessed risk levels, emphasizing lease accounting under Topic 842. It provides a comprehensive overview of lease accounting principles and practices, essential for finance, accounting, and auditing professionals. Participants will gain a deep understanding of lease classification, measurement, disclosure requirements, and the impact of recent accounting standards updates. Through a blend of theoretical concepts and practical examples, learners will develop the skills to navigate complex lease arrangements effectively.

By joining this CPE Course, participants will be equipped with the knowledge and skills to effectively apply lease accounting principles and ensure compliance with regulatory standards.

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Major Topics:

• Typical audit risks and responses for tangible long-lived assets
• Special issues related to initial recognition and capitalization, including capitalized interest
• Key controls related to PP&E
• Lease accounting requirements and practical application of Topic 842

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Overview

• Property, Plant, and Equipment (PP&E) defined

  3 mins
• Capitalization policy

  18 mins
• Exchange of nonmonetary assets

  31 mins
• Overview of lease accounting as per topic 842

  43 mins
• Legally enforceable considerations - Right to terminate

  64 mins
• Discount rate to apply

  80 mins
• Key points for lessee - Lease modifications

  96 mins