During your audit of the inventory account, you notice several journal entries at the end of the year. Assume that the controller reviews all adjusting entries and initials the entry form indicating his or her review and approval.

a. You decide to test this control. Explain why you believe it should be tested.

What is the possible result from testing the control?

b. What is the assertion related to the internal control?

c. Prepare a sampling plan to test the control. The test is performed at the end of the year.

d. How will you select your sample? Do you have several choices in the method used to select the sample? Explain your answer.

e. The accounting firm has determined that the number of tolerable deviations for this internal control tests is zero deviations. Explain how you will evaluate the results of your sample and state clearly the possible conclusions.

f. Explain how you would modify the audit procedures for a dual-purpose test. If a dual-purpose test is performed, what evidence will you receive from the test? Explain your answer.

g. How will you control sampling risk and nonsampling risk in the test?

h. Will you perform a statistical or nonstatistical test? Explain your answer.