Assurance & Co have been provided with the following inventory count instructions by Suit you Co:

Fantastic news! We've Found the answer you've been seeking!

Question:

• Bilie Thor, Finance Assistant, has overall responsibility for the inventory count but she is to be assisted by Mr. Kein Frog, the warehouse manager to, whom the inventory counting Teams are to report and who will be responsible for the detailed organization of the count.

• Five inventory count teams are to carry out the actual count, each team to be responsible for a predetermined section of the warehouse. Each team comprises two persons: one from the accounting department and the other from the warehouse.

• Each inventory count team is to meet Kein Frog at 07:30 am on 30 September 20X6 and will be provided with pre-numbered and pre-printed inventory sheets for the section of the warehouse for which they are responsible. These inventory sheets have been prepared by the inventory control department and show the balance of each inventory item on hand as shown on the inventory records held independently of the warehouse.

• Each inventory count sheet is to be signed by the senior member of the count team and the bin or rack cards held in the warehouse are to be adjusted, if necessary, to actual quantities counted. All cards are to be initialed to show that the count has been made.

• Any goods that appear to be in poor condition are to be noted on the inventory sheets, such action is to be supported by the initials of the senior member of the count team. Any queries during the count are to be referred to Kein Frog to whom inventory sheets are to be returned at the conclusion of the count. Kein Frog is responsible for ensuring that all inventory count sheets have been returned and forwarded to Billie Thog for valuation.

Required

a) Identify THREE matters that will require action by management if the inventory count is to be effective. Explain how the matter could be rectified.

b) Identify and explain FOUR financial statement assertions relevant to inventory account balances at the year end; and for each identified assertion, describe a substantive procedure relevant to the audit of year-end inventory

c)Define net realisable value;