In auditing PPE, which procedure is essential?

In the context of auditing Property, Plant, and Equipment (PPE), agreeing amounts to purchase invoices is essential because it provides direct evidence of the existence and value of these assets. This procedure involves verifying that the recorded amounts in the financial statements for PPE correspond with the source documents, which are the purchase invoices. By matching the accounting records to these invoices, auditors can confirm that the assets were actually acquired, that they are recorded at the correct amounts, and that there have been no unauthorized or unrecorded transactions. This step is crucial for establishing the accuracy of the asset valuation and ensuring compliance with relevant financial reporting standards.

Other methods such as interviews with management, preparing financial statements based on estimates, and testing depreciation trends may provide useful insights or supporting information but do not replace the foundational requirement of verifying asset acquisition through purchase invoices.