Ar Rayyan Furniture is an audit client of your firm and manufactures wooden furniture. Its financial year end is 30 June 2016. On 10 November 2015, fire destroyed the company’s factory building, which included the area used for storing raw materials. The fire was caused by an electrical fault. The factory has now been rebuilt and the company has recommenced trading in May 2019.

The finance director of Woodstock furniture produces monthly management account, whereby inventory and cost of sales are estimated based on sales figures less margins. On 30 September and 31 March, the company conducts full physical inventory counts for its own purposes in addition to its year end count. The results of these counts are compared with the management accounts for September and March and adjustments are made to reflect the physical quantities and their appropriates values.

The finance director has contacted your firm to provide a certificate in support of his claim for loss of profits and loss of inventories arising as a result of the fire.

Required

State the information you would seek and the procedures you would perform in order to reach an opinion on the company’s claim for loss of profits and loss of inventory.