Dar Limited is a manufacturer and exporter of top-quality cheese products to the Irish and European...

 

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Dar Limited is a manufacturer and exporter of top-quality cheese products to the Irish and European market. The business supplies both high-end supermarkets and select restaurants.. It's premises is located in a modem facility in Moylish, Limerick. The business has a year end of 31/10/21. From reading the previous year's working papers, you have gathered the following information for year-end 2020. 31/10/20 Closing inventory €848,000 Revenue €8,765,00 Purchases €1,598,000 Dar Limited has informed the auditor they expect revenue of more than €12,000,000 to be posted for the current financial year ended and it's closing inventory to be similar to that of 2020. The directors are known to keep a tight control over working capital requirements and to this effect have adopted Just-in-Time' management techniques over inventory and installed a modern computerised stock control system. You as, auditor, are keen to observe the stock count on the night of the 2021 financial year end. Requirement: Explain why observation of the physical inventory count is essential for the auditor of Dar Limited above. Q 2(b) [10 Marks] Requiroment: What information should the auditor obtain during the physical count to ensure that cut-off procedures for purchases are accurate? Q 2(c) (10 Marks) Requirement: What information should the auditor obtain during the physical count to ensure that cut-off procedures for sales are accurate? Dar Limited is a manufacturer and exporter of top-quality cheese products to the Irish and European market. The business supplies both high-end supermarkets and select restaurants.. It's premises is located in a modem facility in Moylish, Limerick. The business has a year end of 31/10/21. From reading the previous year's working papers, you have gathered the following information for year-end 2020. 31/10/20 Closing inventory €848,000 Revenue €8,765,00 Purchases €1,598,000 Dar Limited has informed the auditor they expect revenue of more than €12,000,000 to be posted for the current financial year ended and it's closing inventory to be similar to that of 2020. The directors are known to keep a tight control over working capital requirements and to this effect have adopted Just-in-Time' management techniques over inventory and installed a modern computerised stock control system. You as, auditor, are keen to observe the stock count on the night of the 2021 financial year end. Requirement: Explain why observation of the physical inventory count is essential for the auditor of Dar Limited above. Q 2(b) [10 Marks] Requiroment: What information should the auditor obtain during the physical count to ensure that cut-off procedures for purchases are accurate? Q 2(c) (10 Marks) Requirement: What information should the auditor obtain during the physical count to ensure that cut-off procedures for sales are accurate?

Answer rating: 100% (QA)

Answer Solution 2 a iObserving physical inventory is compulsory since it delivers strong evidence th... View the full answer