Determining the amount of inventory that should be written off because of obsolescence is a difficult and challenging audit task because (1) the client will usually state that most of the goods are still salable at current selling prices and (2) net realizable value is only an estimate (in other words, there is no specific, correct price at which inventory should be valued). Because of this, the auditor usually gathers corroborating evidence to provide evidence on valuation and, relatedly, obsolescence. Identify at least five sources of such corroborating evidence.
Answer to relevant QuestionsIn those audits where a heightened risk of fraud exists related to inventory and cost of goods sold, the auditor will want to consider performing certain fraud-related substantive procedures. List at least five such ...The Northwoods Manufacturing Company has automated its production facilities dramatically during the last five years, to the extent that the number of direct-labor hours has remained steady, while production has increased ...Refer to the Professional Judgment in Context feature "Thor Industries, Inc. and Mark Schwartzhoff: Fraudulent Reductions in Cost of Goods Sold Through Manipulation of Inventory Accounts." Answer the following questions.a. ...Locate and read the article listed below and answer the following questions.Nigrini, M., and L. Mittermaier. 1997. The Use of Benford’s Law as an Aid in Analytical Procedures. Auditing: A Journal of Practice & Theory 16 ...MULTIPLE-CHOICE QUESTIONS1. Long-lived assets include which of the following?a. Tangible assets such as equipment.b. Intangible assets such as patents.c. Natural resources.d. All of the above.2. Which of the following ...
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