Question: AP5.3 (LO 1, 2) Basic Assertions and evidence An auditor is planning for the audit of a specialty retail store. Inventory is material, and items

AP5.3 (LO 1, 2) Basic Assertions and evidence An auditor is

AP5.3 (LO 1, 2) Basic Assertions and evidence An auditor is planning for the audit of a specialty retail store. Inventory is material, and items range in value from $1 to over $500. The type of merchandise carried in the store changes every season, and many items are specially ordered with and promotional packaging. Orders are placed six months in advance from overseas deposi inventory and prepaids are at risk of material misstatement. special branding suppliers. Large ts are required to be paid when orders are placed. The auditor believes the account balances for Required a. Identify the key assertions at risk in relation to inventory and prepaids. b. For each assertion, identify a type of evidence that would be relevant and reliable Source: Adapted from the CA Program's Audit & assurance exam, December 2010

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