ness face and vate Show calculations. Note: Quick ratio = Current assets excluding inventory/Current liabilities. d. Would you consider this error to be material? Justify your response. ggest EP 12-12 PPE Audit Evidence Assertions. ence. LO3, 6 Alvin is auditing Demure Fash- ions Inc., a chain of women's clothing stores. 03 Demure operates six stores in shopping malls im across the Toronto area and has been an audit year client of Alvin's form for several years. Alvin has been assigned the audit of Demure's store tion fixtures account. This year the audit partner has X's instructed Alvin that detection risk for the store inly fixtures account must be reduced to a very low ing level because Demure is negotiating new financ- ain- ing that will use the store fixtures as collateral. its Demure's chief accountant has given Alvin the a detailed list of all of the store fixtures (shelv- ing. clothing display racks, and sales counters) included in Demure's general ledger account. its The accounting policy is to record store fixtures ap- at cost, with depreciation recognized using the ed straight-line method om On the company's year-end date, January 2. ere 20X1, Alvin visited all six of the stores, looked re at the fixtures in place, and compared them to ry the descriptions on the list. In eight cases he at could not locate the listed fixture and asked the is store manager where it was. In every case, the manager said the fixture unit had been placed in storage because it was broken and in need of n repair. In one new store, Alvin found nine new clothing racks that were not included on the list. 7 The store manager told him that these racks had . been purchased a few days before year-end. Full as T Required: a. Identify three types of audit evidence that Alvin has obtained, and explain which assertion(s) this evidence is relevant to. b. Of the evidence Alvin obtained, which do you think is the most reliable? Why? c. The procedures described above do not address the valuation assertion for PPE. Explain why these procedures do not address this assertion. Describe one additional procedure Alvin should perform to provide relevant evidence regarding the valuation assertion. ness face and vate Show calculations. Note: Quick ratio = Current assets excluding inventory/Current liabilities. d. Would you consider this error to be material? Justify your response. ggest EP 12-12 PPE Audit Evidence Assertions. ence. LO3, 6 Alvin is auditing Demure Fash- ions Inc., a chain of women's clothing stores. 03 Demure operates six stores in shopping malls im across the Toronto area and has been an audit year client of Alvin's form for several years. Alvin has been assigned the audit of Demure's store tion fixtures account. This year the audit partner has X's instructed Alvin that detection risk for the store inly fixtures account must be reduced to a very low ing level because Demure is negotiating new financ- ain- ing that will use the store fixtures as collateral. its Demure's chief accountant has given Alvin the a detailed list of all of the store fixtures (shelv- ing. clothing display racks, and sales counters) included in Demure's general ledger account. its The accounting policy is to record store fixtures ap- at cost, with depreciation recognized using the ed straight-line method om On the company's year-end date, January 2. ere 20X1, Alvin visited all six of the stores, looked re at the fixtures in place, and compared them to ry the descriptions on the list. In eight cases he at could not locate the listed fixture and asked the is store manager where it was. In every case, the manager said the fixture unit had been placed in storage because it was broken and in need of n repair. In one new store, Alvin found nine new clothing racks that were not included on the list. 7 The store manager told him that these racks had . been purchased a few days before year-end. Full as T Required: a. Identify three types of audit evidence that Alvin has obtained, and explain which assertion(s) this evidence is relevant to. b. Of the evidence Alvin obtained, which do you think is the most reliable? Why? c. The procedures described above do not address the valuation assertion for PPE. Explain why these procedures do not address this assertion. Describe one additional procedure Alvin should perform to provide relevant evidence regarding the valuation assertion