BUSINESS FUNCTIONS IN THE CYCLE AND RELATED DOCUMENTS AND RECORDS Describe the business functions and the related documents and recordsin the inventory and warehousing cycle.
Auditors are required to understand the client’s industry and business but may not be experts in identifying the quantity and value of certain inventory items. For example, consider observing a physical inventory and testing inventory valuation for a client that mines rare gems. In such cases, auditors may use a specialist to assist in testing […]
The following questions deal with tests of details of balances and substantive analytical procedures for inventory. Choose the best response. a. An auditor selected items for test counts while observing a client’s physical inventory. The auditor traced the test counts to the client’s inventory listing. This procedure likely obtained evidence about which balance-related audit objective […]
The following questions concern internal controls, and the testing of internal controls, in the inventory and warehousing cycle. Choose the best response. a. For control purposes, the quantities of materials ordered may be omitted from the copy of the purchase order that is (1) returned to the requisitioner. (2) forwarded to the receiving department. (3) […]
1. Explain why a proper cutoff of purchases and sales is heavily dependent on the physical inventory observation. What information should be obtained during the physical count to ensure that cutoff is accurate? 2. A client applies manufacturing overhead to inventory on the basis of $3.47 per direct labor hour. Explain how the auditor will […]
1. Give the reasons why inventory is often the most difficult and time-consuming part of many audits. 2. State what is meant by cost accounting records and explain their importance in the conduct of an audit.
AUDIT OF THE INVENTORY AND WAREHOUSING CYCLE Describe the business functions and the related documents and records in the inventory and warehousing cycle.Explain the five parts of the audit of the inventory and warehousing cycle.Design and perform audit tests of cost accounting.Apply substantive analytical procedures to the accounts in the inventory andwarehousing cycle.Design and perform […]
You intend to use MUS as a part of the audit of several accounts for Roynpower Manufacturing Company. You have done the audit for the past several years, and there has rarely been an adjusting entry of any kind. Your audit tests of all tests of controls and substantive tests of transactions cycles were completed […]
This problem requires you to access PCAOB Auditing Standards to answer each of the following questions. You can access those standards by viewing content found under the link “Standards.” Review PCAOB auditing standards related to the auditor’s consideration of fraud in a financial statement audit (AS 2401) and related to the auditor’s responses to the […]
Following are six situations that involve the audit risk model as it is used for planning audit evidence requirements in the audit of inventory. Situation Risk 1 2 3 4 5 6 Acceptable audit risk Medium Low High High High Low Inherent risk Medium Low Low High Medium High Control risk Medium High Low Low […]
