Question

The following audit steps are to test ownership of inventory.
Review consignment contracts and scan inventory records for inclusion of amounts for any consigned items not owned.
Review sales contracts for bill-and-hold agreements; determine proper accounting based on terms of the agreements and accounting standards; trace amounts of bill-and-hold contracts to inventory records for proper inclusion or exclusion.
Review loan agreements for any inventory that has been pledged or assigned and examine inventory records for proper treatments (this may be performed with audit of debt.)

Required:
What information might these procedures provide the auditor regarding?
(1) Management integrity?
(2) Going concern?
(3) Fraud risk?
(4) Quality of choice of accounting principles used?
(5) Quality of financial statement disclosure?



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  • CreatedJanuary 21, 2015
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