Question

Described below are potential financial statement misstatements that are encountered by auditors in the audit of inventory and cost of goods sold.
a. Management of a chain of discount department stores systematically overstates inventory quantities at selected locations.
b. Accounting personnel of a manufacturing company make computational errors that under-state the production costs of certain inventory items.
c. Management of a computer reseller overstates inventory value by failing to recognize the loss in value of certain inventory items that are obsolete.
d. Production personnel for a high-tech manufacturing company include in inventory items that failed to meet essential quality standards.
For each misstatement, describe the substantive auditing procedures that may be used by auditors to detect the misstatement. Organize your answer as shownbelow:


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  • CreatedOctober 27, 2014
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