Auditing

1) Identify the main assertion at risk in relation to the audit of Collingwood's inventory and explain why it is a risk

2) Outline a substantive audit test you will perform in response to the risk identified in (a) above. Ensure you identify the evidence source and the audit procedure that is applied

You have been assigned to the position of Audit Manager on the year-end audit of a Melbourne based, computer retailer, Collingwood Ltd. While assessing the risk of material misstatement and determining the appropriate response with regard to inventory. you become aware of the following information: Coilingmod recently won a tender to supply the Department of Defence with various products. in order to win the tender. and prevent competitors from gaining a foothold in the public sector market, Collimmod agreed to supply items at 10% below their cost price. The products are etpected to be delivered to Collingwood prior to year-end. with the rst shipment due to he delivered to the Department of Defence in December 2DX2. Rewind: 1. 0n the basis of the information provided above. identify the main assertion at risk in retation to the audit of Collingwood's inventory. and explain why it is a risk (3 MARKS}. 2. Outline a smug audit test you will perform in response to the risk identied in (a) above. Ensure you identify the evidence source and the audit procedure that is applied (2 MARKS)