8.45 Fictitious Vendors, Theft, and Embezzlement. The following cases are desighed like lll ones in the chapter. Your assignment is to write the audit approach portion of the cases orga- nized around these sections: Objective. Express the objective in terms of the facts supposedly asserted in financial records., accounts. and statements. Control. Write a brief explanation of desirable controls. missing controls, and especially the kinds of "deviations" that could arise from the situation described in the case Tests of conrrols. Write some procedures for getting evidence about existing controls. espe cially procedures that could discover deviations from controls. If there are no contro test, then there are no procedures to perfor t instruct someone about the source(s) of evidence to tap and the work : go to the next section. A "procedure" should to do of balance. Write some procedures for getting evidence about the existence. com ess. valuation or allocation, or rights and obligations assertions ident objective section Discovery summary. Write a short statement about t with your procedures he discovery you expect to accomplish Baile y Books Inc. is a retail distributor of upscale books, periodicals, and magazines. Bailey has 431 retail stores throughout the southeastern states. Three full-time purchasing agents headquarters. They are responsible for purchasing all inventory at the e with or without obtain- wor best prices available from wholesale suppliers. They can purchas ing competitive bids. The three purchasing agents are co R. McGuire in charge of purchas- ing books, M. Garza in charge of purchasing magazines and periodicals, and L. Collins anager of purchasing) in charge of ordering miscellaneous items such as paper products and store supplies s. In return, thought to be paying inflated prices, which first are recorded in inventory and then One of the purchasing agents is suspected of taking kickbacks from vendor f goods sold and other expense accounts as the assets are sold or used he duties of Collins, the manager in charge. do not include audit or inspection of the per- s's performance mance of the other two purchasing agents. No one audits or reviews Collin The purchasing systerff is computerized and detail records are retained. An extract from these records is in Exhibit 8.45.I This kickback sc heme has been going on for two or three years. Bailey Books could have ,larniirl hv ceveral hlindred thousand dollars