ACCA Audit and Assurance (F8) Practice Exam

During an audit, which action is taken to verify additions to Property, Plant, and Equipment (PPE)?

1. Vouch cost to recent supplier invoices

2. Review sales samples

3. Confirm depreciation calculations only

4. Examine distraction costs

The correct answer is: Vouch cost to recent supplier invoices

To verify additions to Property, Plant, and Equipment (PPE), vouching the cost to recent supplier invoices is a fundamental procedure. This action confirms the accuracy of recorded transactions related to PPE by providing direct evidence of the amounts paid and the nature of the purchases. Supplier invoices serve as primary documentation that indicates what was acquired and the costs associated with those assets, ensuring the amounts recorded in the financial statements reflect actual expenditures. This method is particularly effective because it ties the entries in the accounting records to external documentation, which enhances the reliability of the information being verified. An auditor can check that the asset has been properly capitalized and ascertain any relevant details, such as the date of purchase and ownership, which are crucial for understanding the completeness and appropriateness of asset additions. Other options do not provide the same level of verification. For example, reviewing sales samples pertains to evaluating inventory or sales transactions rather than confirming asset additions. Confirming depreciation calculations solely focuses on the subsequent accounting treatment of PPE rather than the additions themselves. Examining distraction costs is not relevant to verifying the initial costs of PPE, as it relates more to the costs associated with asset disposal or impairment, rather than acquisition.