The auditor has noted in the audit of inventory for a manufacturing company. He has found...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
The auditor has noted in the audit of inventory for a manufacturing company. He has found that the client recorded sales immediately for consignment inventory sent to consignee. Raw materials received from the supplier were not checked and the data are entered into the inventory system according to the purchase orders. A new supplier has been found to be sending the wrong raw materials to the company. Administration and sales salaries were counted as overhead and allocated to work-in-process inventory during the year. a) Based on the auditor's findings, explain three misstatements that may arise and the corresponding management assertions regarding account balance that may be violated. (12 marks) b) In view of the possible misstatements you identified in (a), the auditor has used the following three types of evidence in the audit of inventory: (1) Physical examination (2) Confirmation (3) Recalculation (i) For each misstatement you identified in (a), determine which type of evidence can be used to detect it and describe a possible audit procedure. marks) (ii) State the relevant general audit objective and specific audit objective of the auditor for each procedure. marks) (ii) Evaluate the reliability of each evidence provided by the procedures you have suggested. How may the reliability of evidence (1) and (3) be further enhanced? (9 (9 (10 marks) The auditor has noted in the audit of inventory for a manufacturing company. He has found that the client recorded sales immediately for consignment inventory sent to consignee. Raw materials received from the supplier were not checked and the data are entered into the inventory system according to the purchase orders. A new supplier has been found to be sending the wrong raw materials to the company. Administration and sales salaries were counted as overhead and allocated to work-in-process inventory during the year. a) Based on the auditor's findings, explain three misstatements that may arise and the corresponding management assertions regarding account balance that may be violated. (12 marks) b) In view of the possible misstatements you identified in (a), the auditor has used the following three types of evidence in the audit of inventory: (1) Physical examination (2) Confirmation (3) Recalculation (i) For each misstatement you identified in (a), determine which type of evidence can be used to detect it and describe a possible audit procedure. marks) (ii) State the relevant general audit objective and specific audit objective of the auditor for each procedure. marks) (ii) Evaluate the reliability of each evidence provided by the procedures you have suggested. How may the reliability of evidence (1) and (3) be further enhanced? (9 (9 (10 marks)
Expert Answer:
Answer rating: 100% (QA)
Page No Date Base d on s findlng the auditoos Three nis Ans statemeut That ay aard a2ise a... View the full answer
Related Book For
Posted Date:
Students also viewed these accounting questions
-
You are responsible for the audit of inventory for Honey Best Grocery Wholesales, Inc., a closely held grocery wholesaler that sells to independent grocery stores. Inventory is by far the largest...
-
You have been assigned to the audit of inventory for a private company that owns and operates a chain of retail jewelers. The companys sales revenue has grown by 300% in the last two years, primarily...
-
You are creating a model for a manufacturing company with four major plants and ten warehouses. They want to reduce costs by determining the optimal number and location of the plants and warehouses....
-
Your buddy mentioned that she is thinking about suing under the qui tam law. You are not sure what that is. a. What is a qui tam provision? b. Can employees who do not work for the government sue...
-
What are the goals of the SEC?
-
Each of the six firms in the table below is expected to pay the listed dividend payment every year in perpetuity. a. Using the cost of capital in the table, calculate the market value of each firm....
-
The October 12, 2006, edition of The Wall Street Journal carried an article entitled Expedia Might Trip Debt Covenant. The article revealed that the share price of Expedia Inc., an online travel...
-
Juniper Corp. makes three models of insulated thermos. Juniper has $400,000 in total revenue and total variable costs of $240,000. Its sales mix is given below: Percentage of Total Sales Thermos A...
-
Symbolic Perspective: Discuss the significance of practice theory, routines and improvisation for understanding social structure
-
You have taken out a loan of $19,000 for 4 years with an interest rate of 3% compounded annually. The loan will be repaid by end of year payments. Fill in all the boxes below, and round all entries...
-
Uncle Clem has 5 bowling balls, 3 bowling shirts, 4 pairs of bowling shoes, and 8 bowling towels. To participate in a bowling tournament he must bring his own bowling ball, shirt, shoes, and towel....
-
nollonut Use the graphs below for questions 3 and 4. Graph A 8x Graph B srov twoted adi havia noinnut fra s most annitumo lin 3. If the function in Graph A is horizontally stretched by a factor of 3,...
-
APC Wood is a business that sells wood to both domestic and overseas customers. All the income and expenses include GST if necessary. Below are the business details and income and expenses report for...
-
2/3 of A is equal to B. 30% of B is equal to C. The ratio of C:D is 3:5. If B is equal to 16, find the difference between A and D.
-
Sunshine Blender Company sold 8 0 0 0 units in October at a sales price of $ 4 0 per unit. The variable cost is $ 1 5 per unit. Calculate the total contribution margin.
-
Analyze the efficiency of the algorithm used in the code. Use O-notation. class Solution { public int[] countBits(int n) { int[] out = new int[n + 1]; for (int i = 0; i
-
sing number of case management services 13. Researchers would not accept the operationalization of health based on socio-economic status (low- income, middle-income, upper-income) because this...
-
Do public and private companies follow the same set of accounting rules? Explain.
-
Are the penalties assessed by OSHA sufficient to deter violations? What penalties should be available when safety violations lead to deaths of workers?
-
Is the current privacy protection for e-mail and internet use sufficient?
-
An employee of a large retailer complained to his employer that monetary credits were being issued to customers without receipt of proper documentation. In his view, this increased the chances that...
-
The following financial information is known about Pfizer, Inc. for the year ended December 31, 2015. (all amounts in millions): yom a. The balance of cash and cash equivalents was \($3,641\). b....
-
The following data were taken from the financial statements of The Amphlett Corporation, which is all equity financed. Required 1. Calculate the following ratios for 2016 and 2017: a. Return on...
-
The following data were taken from the financial statements of The Amphlett Corporation, which is all equity financed. Required: 1. Calculate the following ratios for 2016 and 2017: a. Return on...
Study smarter with the SolutionInn App