Grouse Design Ltd is a wholesaler of exclusive fashion clothing. The company distributes clothing to large retail stores for selling in the major capital centres and large shopping centres throughout Australia. You are planning the audit for the year ended 30 June 2020 and have gathered the following information from your discussions with management:

1. The company uses a computerised perpetual inventory system so they do not undertake stocktakes. 

2. Unlike their competitors the company has experienced an increase in sales throughout New South Wales and Victoria 

3. Most inventory is imported and is invoiced to Grouse Design Ltd in U.S. dollars. 

4. As Grouse Design uses Just-In Time to manage their inventory items they have low inventory levels with some allowances for contingencies including inventory delivery delays. 

Required: 

a) For each of the four situations described above identify one risk (and provide a brief explanation for your reasoning - 1 or 2 sentences is adequate) regarding how this situation could impact the accuracy of the financial statements. 

a) For each of four situations described above determine which accounts on the financial statements could be impacted and identify the appropriate Audit Assertion'.

Answer rating: 100% (QA)

SEPart a 1 The company uses a computerised perpetual inventory system In this accounting period no s... View the full answer