Q3. Using Generalised Audit Software for Substantive Tests

Hamilton Ltd is an Australian retailer of pharmaceuticals, located in Hawthorn, Victoria. The company brands itself as offering discounted prices for pharmaceutical products, supplements, and weight loss products. Hamilton maintains a computerised inventory system which includes the following fields for each of their product lines:

• Stock code (alpha-numeric field);

• Product description (alphabetical field);

• Use-by Date (date field: dd/mm/yyyy);

• Quantity in stock (numeric field);

• Unit cost (numeric field);

• Total value on hand (calculated field);

• Date of last sale (date field: dd/mm/yyyy);

• Year to date sales quantity (numeric field);

• Last years year to date sales quantity (numeric field).

  Required: Using generalised auditing software in relation to the inventory of Hamilton:

1. Describe one substantive procedure related to the existence assertion.

2. Describe two substantive procedures related to the valuation and allocation assertion.

3. Describe two exception reports that could be generated to provide insights into potential

   problems with the data file.