Acme hardware ossible questions/ concern will be raised by the John Smith. What are John Smith's Objectives? Express an opinion as to whether the financial statements present fairly and according GAAP, in a manner that is consistent with the previous periods. Inventory valuation, advertising, (depreciation, making provisions, re-valuation of assets). What is GAAP/ International GAAP/ IFRS? Inventory? Lower of cost or market Advertising? Expense as in period cost. What exactly can the store manager do to affect income in this area? Inventory? --- Do nothing-when? Write down ---When? Advertising? - Incur----When? Expense-When? Under what conditions could any of these actions lead to a problem for the auditor in being a to give a clean opinion. If the problem condition has occurred, is it material? What tests could the auditor perform? Should management be concerned? Why? What changes to the management control system could management make to prevent or reduce potential problems