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Part $1$

Audit$1,$ Audit$2,$ and Audit$3,$ all involving private$$ companies, require the auditor to develop an overall risk response and audit approach.

Requirements

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Part $1$

Audit$1$:

The client has inventory at approximately $50$ locations in a$$ three$-$province region. The$$ inven$-$tory is difficult to count and can be observed only by travelling by automobile. The internal controls over$$ acquisitions, cash$$ disbursements, and perpetual records are considered effective. This is the fifth year that you have done the$$ audit, and audit results in past years have always been excellent. The client is in excellent financial condition.

Requirement a$.$ For Audit$1,$ recommend a mix of audit procedures for the audit of inventory and cost of goods sold. Justify your answer. Include in your recommendations both tests of controls and substantive tests.

$$First$,$ recommend an evidence mix for this audit.

Audit $1$

Evidence Mix

Procedures to obtain an understanding of internal control

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Tests of controls

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Substantive tests of transactions

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Analytical procedures

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Tests of details of balances

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