What features of the cost accounting system would be expected to prevent the omission of recording materials used in production?
Answer to relevant QuestionsWhen auditors want to use an auditee’s sales forecast for general familiarity with the production process or for evaluation of slow-moving inventory, what kind of work should be done on the forecast? Explain how the auditor’s risk assessment affects the design of the substantive audit program. Which government tax returns can be reconciled in total with employees’ year-to-date earnings records? Reconciled in total but not in detail? If the actual sales for the year are substantially lower than the sales forecast at the beginning of the year, what potential valuation problems may arise in the production cycle accounts? Is there anything wrong with auditors helping auditees obtain bank loans to pay their accounting firm’s fees?
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