ACCUMAG - PRACTICE CASE STUDY You have been assigned to be part of the audit team of Grey 8 Black (GB) auditors. GB has been tasked with doing the inventory count of its new cllent Everest Blkes Ltd. The Bike company produces around 10 variants of bikes in different colours. The warehouse storing the blkes has racks which go as high as 12 meters. Further each bike is wrapped with protective wrapping to avoid dust and making sure the bike is not spoiled. However, the wrapping is not seen through (opaque) hence it is difficuit to get the idea of colour clearly. The company stores 80% of its stock in its own warehouse and the balance 20% is stored in sub-contractors' warehouse. Since the bikes are heavy it requires 2 persons to lift it. You have also been given important information below: 1. Inventory audit to be performed as of 30 June 2022 (company's yearend) 2. Previous auditors for 30 June 2021 were removed owing to a difference of opinion with the directors of the company. They had raised concerns on the inventory valuation and pressed for a provision and the same was not agreed by the directors. At the end however the auditors went ahead without the provision and gave a clean chit to the inventory valuation. 3. Financial information avaliable You have been tasked with writing an audit memo which needs to cover the following points. A) How would you asses the previous auditors arrived at true and fair value of the Inventory as of 30 June 2021. Mention the various points and also suggest if any analytical review would be performed to assure correct inventory valuation of last year. B) Mention key points as part of Inventory count procedure based on your knowledge. How these procedures would help your team and the client. C) Based on the above information of the company and its product. What practical problems you think would come up during the inventory count. D) Based on the financial information assess whether the inventory valuation for 30 June 2022 looks to be fair