You have been assigned to the audit of Technotrics, a company specializing in the wholesale of a wide variety of electronic products. Its major product lines are stereo and similar electronic equipment, as well as computers and computer add-ons such as hard disks, memory boards, and so forth. The client has four major warehouses located in Atlanta, Las Vegas, Minneapolis, and Philadelphia. At year end, the client has approximately $250 million in inventory, an increase of $7 million.

Required

a. Indicate how the auditor can gain information about major changes in products handled by the client, and about the effect of competition on existing products.

b. Indicate how the auditor might use ACL to search for slow-moving or potentially obsolete goods in the client’s year-end inventory.

c. What other procedures might the auditor use in determining whether significant portions of the client’s year-end inventory have a market value less than cost?