Brown, CPA, is auditing the financial statements of Big Z Wholesaling, Inc., a continuing audit client, for
Question:
Assume:
1. Brown issued an unqualified opinion on the prior year's financial statements.
2. All inventory is purchased for resale and located in a single warehouse.
3. Brown has appropriate computerized audit software.
4. The perpetual inventory file contains the following information in item number sequence:
a. Beginning balances at February 1, 2014: item number, item description, total quantity, and price.
b. For each item purchased during the year: date received, receiving report number, vendor item number, item description, quantity, and total dollar amount.
c. For each item sold during the year: date shipped, invoice number, item number, item description, quantity, and dollar amount.
d. For each item adjusted for physical inventory count differences: date, item number, item description, quantity, and dollar amount.
5. The physical inventory file contains the following information in item number sequence: tag number, item number, item description, and count quantity.
Required:
Describe the substantive auditing procedures Brown may consider performing with computerized audit software using Big Z's two computer files and Brown's computer file of test counts. The substantive auditing procedures described may indicate the reports to be printed out for Brown's follow-up by subsequent application of manual procedures. Do not describe subsequent manual auditing procedures.
Group the procedures by those using (a) the perpetual inventory file and (b) the physical inventory and test count files.
Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
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Related Book For
Auditing and Assurance Services A Systematic Approach
ISBN: 978-0077732509
10th edition
Authors: William Messier Jr, Steven Glover, Douglas Prawitt
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