 documentation that is necessary for it, and can we observe basically what the process is that happened? Possibly can we observe the actual equipment itself? Are we at the location that we could observe it, or is it some location that we can't basically observe? Misstatement detected in the prior years. So if there's misstatements, of course, in the prior year regarding inherent risk, regarding property, plant and equipment, then we're going to increase the inherent risk in the current year. Now complexity, if we have a straightforward type of transaction with property, plants and equipment like they bought property, plant and equipment, and they paid cash for it, well, that's pretty straightforward. That's not too difficult for us to consider complexity wise, although the transaction would be material and therefore something we would want to consider. If they bought it for a loan, then they financed part of it, bought a forklift, paid some cash, financed part of it. Well, that's still not too unusual. We could probably consider that leasing if they bought it as a capital lease or if they self-constructed the capital asset, they made it themselves. Those are two types of things that can be far more complex for us to consider the lease in the format of a lease as opposed to a purchase. And then we're going to want to put it on the books as a purchase because in substance we believe it is one with regards to a capital lease can be a bit more difficult for us to think about the accounting issues related to it. If they made the capital asset themselves, they constructed it and then used it. They made it not inventory. They made the capital asset property, plant and equipment to value that can be a little bit more confusing as well. Difficulty to audit the transactions. So the easy type of transaction to audit is an assets purchased directly from the vendor. So again, if you had a transaction where they just said, hey, I need a forklift, they went to the vendor, they bought the forklift, they bought a big piece of equipment, they went to basically Home Depot and bought the equipment that it's pretty straightforward types of transaction. Again, it might be material, something we want to consider, but not too difficult. The more difficult types of transactions or transactions involving something like a donated property. So something was donated. How do we know what the value is? Because it's not on a market transaction. So we want to consider that non-monetary exchanges. So if there wasn't money exchanging hands, then that's going to increase the complexity. Obviously, we would consider if it was an arm length transaction, that something was exchanged to help us to basically value on a market value method. And then the self constructed assets, again, that's going to be more difficult if they made the asset. Misstatements detected in the prior year's audit. So of course, when misstatements are found in the prior year, the auditor will increase the inherent risk factor in the current year. Now we want to consider control risk. So recall, we think about inherent risk, then the control risk to then set detection risk. That's the amount of testing that we're going to do. So control risk, control procedures generally part of the purchasing process. When we think of controls, then in other words, we've thought about the purchasing process, the controls should be much the same for the purchasing of property planting equipment, considering the fact that it's going to be part of the purchasing process with regard to the assertion of occurrence and authorization over property planting equipment. However, larger capital asset transactions may be subject to additional controls. In other words, the company may have something in place where they're going to say, this is the normal purchasing process for normal purchases. If however you purchase something, say over a certain dollar amount, you need additional approval, additional authorization for those types of purchases. So we might have, you know, more type of things that we would have to test over and above the traditional purchasing process with regard to property planting equipment. Business will have an authorization table for approving capital asset transactions. Control activities will also need to identify assets no longer in use. So notice that's going to be another key concern for us as the auditor. Those assets that are now obsolete or not being used that are property planting equipment, they should be removed. And remember, they're not always removed. And sometimes it doesn't create a significant amount or effect on the financial statements from a net perspective. Because the items on the books as an asset, and maybe it's fully depreciated. Therefore, the book value is zero. But still, the equipment's on the books overstated, the accumulated depreciation is on the books overstated. And therefore, although the net is zero for that asset, we would still need to dispose of it. So even if the, and that might not be the case, it might still have valuation on the books, and they're not using it, it's obsolete for some reason. So even if it's a net book of zero, we want to have consideration to look at those property planting equipment assets and remove them from the books, they shouldn't be, you know, on the books. Now, when we consider the property planting equipment, what we're going to do is we're going to get a subsidiary ledger, of course. So when we think about the property planting equipment, we think on the balance sheet, we have the asset of the property planting equipment or the list of assets that our property plants equipment categorized out by land, building equipment and so on. And we have the accumulated depreciation. But those are all lumped together within those categories, we need then a subsidiary ledger, some type of ledger that's going to be breaking out in detail the supporting type of documentation, we have to have this information, because we need to know what's actually comprising the pieces of equipment that are on the books. Now, this can be a detailed and confusing report, we need to understand that. And we also need to understand that there could be when you consider the creation of the subsidiary ledger for depreciation and equipment, then typically you have to do that for what we're considering the book value. And there should be, there's going to be other types of calculations that are going to be necessary, at least for the taxes, because the accumulated depreciation will be different, typically, for taxes. So it could be a complex schedule. Information we're going to need on it is going to be the description of the property plants and equipment. So we need to have a list of the property plants and equipment on there. And it should notice that when you're putting together a property plants and equipment, if you're recording property plant and equipment on the GL side of things as well, just note that unlike financial accounting, where we often just put something on the books as equipment, we debit equipment, when we put it on the books in real life, we want to have the description, what is this? This is a cat, you know, forklift, blah, blah, this maybe have a serial number on it. We want to know the description of what is on there. And what we also do not want to do is put something on the books as equipment and lump together five things. So if we bought like five forklifts and one, you don't put the thing on there is five forklifts and debit property plant equipment for the value of five forklifts because the subsidiary ledger isn't going to give us the detail. We need the detail of all of all the actual equipment broken out, because if you sell one of those forklifts and not all five of them, for example, that that would be a problem because now it's on the books as a lump sum one kind of thing. So we need the description on there. We want the location, any ID number. So again, you don't we don't put the books as a journal entry that we typically do with financial account and just debit like equipment. We need the, you know, it's in the subsidiary ledger. It's a forklift. And here's the ID number related to that that item. If we're going to sell it, we're not going to use a first in first out method of flow method. Typically, we're going to identify specifically specific identification of the item, the piece of equipment that we are selling to do that. We need to identify it in some way, such as an identification number, date of acquisition. Obviously, we need the acquisition date. That will help us to consider the depreciation that will be considered on it. Depreciation methods for the books, depreciation method for taxes. So notice we're going to have at least two depreciation methods. It could be quite confusing because different classes of assets are going to have different lives, could have different depreciation methods used possibly given the different classes. And there will certainly be different depreciation methods used between the book depreciation done in accordance with something like generally accepted accounting principles and the depreciation done by the tax code, which is completely different. So we're going to, we want to consider both of those items. We are testing for the book depreciation generally accepted accounting. But we also wanted as part of our testing to consider and possibly reconcile to the tax in some way because that's going to be a verification process or can help us to verify considering the taxes are another form of reporting that has been done. We can tie out at least do the total amount of property planted equipment and each category tie out on taxes and on our books. And we can consider the reconciliation of the depreciation methods. Salvage value, that's the value that it's going to have when at the end, the estimated value at the end of the useful life that we consider at least the scrap value sometimes called and then we're going to have the estimated useful life, of course, and that's useful life, the salvage value and the cost are things that are going to help us to consider whether or not the depreciation calculation was done correctly. Now we're going to consider the segregation of duties related to property, plant and equipment. So separation of duties, segregation of duties, key internal control, whenever we think of internal controls, one of the first things we want to think of is the separation segregation of duties. Obviously, larger companies are going to be able to have more separation segregation of duties than smaller companies given the fact that they should have more staff to do so. So first item, function of initiating the purchase of a capital asset is segregated from the approval function. So notice, part of this, you're going to see some overlap, of course, with the purchasing process, with the consideration of purchasing property, plant and equipment. Now, why would we need that? Because if it was not segregated, if those functions were not separated, fictitious or unauthorized purchases of assets can occur, this can result in purchases of