Question

In: Accounting

All financial statement audits will include an audit of the inventory cycle. You should plan for...

All financial statement audits will include an audit of the inventory cycle. You should plan for the audit by setting the audit objectives. For this assignment, write and submit 300–400 words that set specific internal controls that should be included to meet the following management assertions:

Existence

Completeness

Accuracy or valuation

Rights and obligations

Presentation and disclosure

Expert Solution

An audit plan with respect to inventories in companies must verify the

management's assertions regarding inventory, as part of testing & satisfying about the company's internal control mechanisms ,in place.

In this process, the auditor should be convinced on the following aspects:

Existence:

that the inventory actually exist & the relevant transactions have actually taken place.

Any additions to inventory ,ie.purchases can be vouched with cross verifying with purchase requisitions and item received reports

Completeness

To ensure all the transactions with respect to inventory are complete, ie. Issues to production recorded are accounted in the process, and the final inventory balance as per books tally with that of physical -stock taking records.

so as to ensure the records are complete & correct.

Accuracy or valuation

To test that the valuation of inventory--ie issues to production as well as the ending inventory --are accurate & proper, so that the cost of goods sold in the Income statement is neither over nor under-stated-- ie. To give a clear picture about the costing methods followed.

Also, to ensure clarity about obsolete , slow-moving & non-moving items of inventory & their valuation methods adopted.

Rights and obligations

Inventory recorded must be adequately & fully supported by respective vendor's invoices & also matched with goods-received notes.

Presentation and disclosure

Inventory recorded must be adequately & properly classified, disclosed & presented at fair value ,corroborated with the financial statements.

ie. Should ensure to present a perfect schedule for that given in the Income statement & balance sheet.

ekkarill92 answered 1 year ago

what are the differences of a financial audit verses a SSAE-16 audit? Why are these audits...

what are the differences of a financial audit verses a SSAE-16 audit? Why are these audits important and which do you think is the more thorough audit from a security perspective?

Auditors generally use a financial statement cycle approach when performing a financial statement audit. Describe the...

Auditors generally use a financial statement cycle approach when performing a financial statement audit. Describe the transactions flow, using specific examples, from journals to financial statements that produce financial statements.

All audits should have a well-developed time budget, which is used to determine the audit fee....

All audits should have a well-developed time budget, which is used to determine the audit fee. Suppose your client representative reviewed the time budget and noticed a significant amount of time is being allocated to inventory observation. To reduce audit fees, she proposes a significant reduction in time by offering to provide a representation letter regarding the inventory balance. Please discuss the sufficiency of this audit evidence. Discuss and explain the additional information you will need to determine how to...

Financial audits, Operational audits, Compliance audits, Information System Audits Which of these audits do you consider...

Financial audits, Operational audits, Compliance audits, Information System Audits Which of these audits do you consider most important and why?

In inventory management, the requirement of cycle counting include all of the following EXCEPT a) Closing...

In inventory management, the requirement of cycle counting include all of the following EXCEPT a) Closing the facility to ensure accurate inventory counts b) Reconciling inventory counts with inventory records c) Dividing inventory into classes d) Counting the inventory frequently Justify your answer 2)In inventory management, the requirement of cycle counting include all of the following EXCEPT a) Closing the facility to ensure accurate inventory counts b) Reconciling inventory counts with inventory records c) Dividing inventory into classes d) Counting...

financial statement audit

The audit assistant has been assigned to review performance indicators in the purchasing department of Kentucky Kapers, a manufacturing audit client. The assistant reports to you that he has obtained a copy of reports used by the supervisor in the purchasing department to assess the performance of the purchasing team. The reports include details of orders processed each day, any backlog of orders and the time taken to clear the backlog each week, and overtime requests by staff in the...

In a short essay form, discuss the similarities and differences between financial statement audits, operational audits,...

In a short essay form, discuss the similarities and differences between financial statement audits, operational audits, and compliance audits. Give an example of each type. Please explain in detail for each audit because my textbook does not explain it well.

Complete a final business plan that should include all sections of a business plan including any...

Complete a final business plan that should include all sections of a business plan including any appendices with resumes, and supporting documents for your business. Before compiling, The business should be presented as if you were presenting it to an investor.

Results of Purchasing Cycle Operational Audit Following the operational audits of the Purchasing function, 800 purchase...

Results of Purchasing Cycle Operational Audit Following the operational audits of the Purchasing function, 800 purchase orders were reviewed and the following weaknesses were found: 51 orders were not signed by a purchasing officer. 15 were not authorised by the correct purchasing officer for that product. 12 purchases of goods or services were made with verbal requests from store managers and purchase orders were not raised for them. 35 orders have been outstanding for more than three months. 8 additional...

You are the audit manager at Deloitte and you are finalising the audits for 30 June...

You are the audit manager at Deloitte and you are finalising the audits for 30 June 2021. The following independent and material matters have come to your attention: 1. WorldCom.Social Ltd provides social housing to approximately 1500 tenants at below normal market rents. WorldCom.Social is a reporting entity under the Corporations Act. During the year, there has been a review of the basis for calculating the lives of the houses owned by the organisation. Previously, these houses were assessed to...