Q3. Using Generalised Audit Software for Substantive Tests

Nichol Ltd is a medium-sized manufacturer of commercial coffee machines, supplying the hospitality industry in Australia. Nichol maintains a computerised inventory system which includes the following fields for each of their product lines:

• Stock code (alpha-numeric field);
• Stock location (alphabetical field);
• Product description (alphabetical field);
• Quantity on hand (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 Nichol:

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