You are currently reviewing the audit files of Eighties Fashions Ltd, a manufacturer and retailer of retro clothing. In your review of your audit assistant’s work on stock, you note the following:

1. In performing substantive analytical procedures, the audit assistant has used several detailed management reports supplied by the management accountant. These provided detailed figures, which allowed tests such as inventory turnover by product line to be carried out. The audit assistant followed up all results that differed from those expected, and obtained satisfactory explanations from management. The overall conclusion was:

Results of analytical review procedures concur with our knowledge of the client’s business. Variations from expected results have been satisfactorily explained by the client. These results allow a significant reduction in the tests of details work.

2. To audit the provision for obsolescence, the audit assistant obtained the aged stock report as at balance date. As stock comprises fashion items and quickly becomes obsolete, all stock items over six months old were selected for testing. Any items appearing to be obsolete (e.g. where there were no recent orders) were checked to ensure they had been provided for. The audit assistant concluded that:

All testing showed satisfactory results, and the provision for obsolescence appears to be fairly stated.

Required

(a) Outline any queries you would raise with your audit assistant.

(b) Describe the additional audit procedures you believe would need to be performed to ensure sufficient appropriate audit evidence is obtained for the two situations.