Audit Planning

In December 2021, you accounting firm accepted an audit engagement at Jenson JewellersLtd, a company that deals largely in diamonds. The company has retail jewellery stores in several Australian states and a diamond wholesale store in Sydney. The wholesale storealso sets the diamonds in rings and other jewellery.The retail stores place orders for diamond jewellery with the wholesale store in Sydney. Abuyer employed by the wholesale store purchases diamonds in the local and overseasdiamond market, and the wholesale store then fills the orders from the retail stores andfrom independent customers. They maintain a substantial inventory of diamonds. Thecompany values its inventory by the specific identification cost method.

Required: Assume that at the inventory date, you are satisfied that Jenson Jewellers Ltd has no itemsleft by customers for repair or sale on consignment and that no inventory owned by the company is in the possession of external parties.

a) An audit program is required for the verification of the company's diamond and diamondjewellery inventories, identifying any steps that you would apply only to the retail stores or to the wholesale store.