On December 31, 2018, Best Cement Inc., a cement wholesaler, conducted its annual year-end inventory count. Best Cement stores all of its cement in large storage silos (very tall cylinder-shaped metal bins). Best Cement’s staff member Aston Matthews was assigned to help with the year-end cement inventory count. The weight of the cement (in kilograms) is estimated using a mathematical formula and the dimensions of the silo and the space taken up by cement inside the silo. To figure out the space taken up by cement inside the silos, Aston was supposed to climb on top of each silo and use a long measuring stick to find out the depth of cement inside each silo. Since it was cold and windy, Aston didn’t feel like climbing on top of the silos. He simply guessed the depth of cement and gave his numbers to the company’s controller, who used them and the mathematical formula to derive the weight of cement inventory on hand at year-end.

REQUIRED

a. Based on the facts depicted in the case, identify the relevant management assertion(s) at most risk of being incorrect:

1) Valuation

2) Cutoff

3) Existence

4) Rights and Obligations

5) Completeness

6) Classification

b. Propose a control that Best Cement Inc. could implement to ensure the cement inventory count is done correctly.

c. How should an auditor deal with the inventory count issues discussed in Part a?