Brown, CPA, is auditing the financial statements of Big Z Wholesaling. Inc., a continuing audit client, for the year ended January 31, 2006. On January 5, 2006, Brown observed the tagging and counting of Big Z's phys- ical inventory and made appropriate test counts. These test counts have been recorded on a computer file. As in prior years, Big Z gave Brown two computer files. One file represents the perpetual inventory (first-in, first- out) records for the year ended January 31, 2006. The other file represents the January 5 physical inventory count. Assume: 1. Brown issued an unqualified opinion on the prior year's financial statements. 2. All inventory is purchased for resale and located in a single warehouse. 3. Brown has appropriate computerized audit software. 4. The perpetual inventory file contains the following information in item number sequence:

a. Beginning balances at February 1, 2005: item number. item descrip- tion, total quantity, and price.

b. For each item purchased during the year: date received, receiving re- port number, vendor item number, item description, quantity, and total dollar amount.

c. For each item sold during the year: date shipped, invoice number, item number, item description, quantity, and dollar amount.

d. For each item adjusted for physical inventory count differences: date, item number, item description, quantity, and dollar amount. 5. The physical inventory file contains the following information in item number sequence: tag number, item number, item description, and count quantity. Required: Describe the substantive auditing procedures Brown may consider per- forming with computerized audit software using Big Z's two computer files and Brown's computer file of test counts. The substantive auditing proce- dures described may indicate the reports to be printed out for Brown's follow-up by subsequent application of manual procedures. Do not describe subsequent manual auditing procedures. p-986