Question

Lois is evaluating the ICFR for Pawtucket Patriot Brewery. She is examining an activity that occurs periodically, specifically an inventory count. This is not an everyday operation of Pawtucket Patriot Brewery. But they don’t have a good IT system to track inventory and the only way the purchasing department knows what it needs to buy and the production manager knows how much and what to make is as the result of the physical count. The company makes and sells beer. Inventory consists of beer that has already been placed in bottles and is ready for distribution; beer in huge vats still being processed, and all the supplies that go into making beer – not only the beer ingredients, but also empty bottles and the supplies needed to bottle the beer.

Required:
a. Classify this inventory observation activity using the AS 2 groupings of: routine, non routine, estimating.
b. As Lois reads through the client’s plan for the inventory count what processes and procedures should she be looking for? Why? What are the assertions that are important to address for this account and with this client control?
c. Is there one or more audit steps you think Lois should conduct while the client counts inventory? List them.



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  • CreatedJanuary 21, 2015
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