The following are audit procedures of ABC Companys inventory and warehousing cycle. The company is a manufacturing
Question:
The following are audit procedures of ABC Companys inventory and warehousing cycle. The company is a manufacturing industry producing car and motorbike spare parts. The inventory value at ABC Company is 210.15 billion. All of ABC Company\'s inventory is located at the head office and third party warehouses.
Bernard and his team have carried out several audit procedures in connection with observing inventory calculations and related inventory cycles as follows:
The total value of inventory stored at the Third Party, Delta Company warehouse is around 25% of the total inventory of ABC Companys. The auditor has sent a confirmation letter directly to the third party, Delta Company, but the confirmation response has not been received until the date of the audit report, namely March 15 2023.
Requested:
- The client explains that the inventory in the third party warehouse, Delta Company is in good condition, and the client has provided a \"certification letter\" from Delta Company on December 30, 2022 containing information on the quantity, type and condition of inventory stored in the Delta Company warehouse to auditors. Give your opinion, and are there any implications for the form of the audit report opinion? Guess what auditor\'s opinion (audit opinion) can be given by the auditor if this is the case.
Auditing and Assurance services an integrated approach
ISBN: 978-0132575959
14th Edition
Authors: Alvin a. arens, Randal j. elder, Mark s. Beasley