ACE Corporation does not conduct a complete annual physical count of purchased parts and supplies in its principal warehouse but uses statistical sampling to estimate the year- end inventory. ACE maintains a perpetual inventory record of parts and supplies. Management believes that statistical sampling is highly effective in determining inventory values and is sufficiently reliable, making a physical count of each item of inventory unnecessary.

a. List at least 10 normal audit procedures that should be performed to verify physical quantities whenever a client conducts a periodic physical count of all or part of its inventory
b. Identify the audit procedures you should use that change or are in addition to normal required audit procedures ( in addition to those listed in your solution to part a) when a client utilizes statistical sampling to determine inventory value and does not conduct a 100 percent annual physical count of inventory items.

  • CreatedOctober 27, 2014
  • Files Included
Post your question