Bellima, CPA, has been engaged to audit the financial statements of Dew Inc., a manufacturer of semiconductors, for the year ended 12/31/Y2. As an audit staff member at Bellima, you have been assigned to the engagement team, which has been gathering information during the month of October Year 2 as the team prepares and plans for the audit.

Using the information compiled by the engagement team, your team manager, Jenna, has asked you to prepare a detailed audit engagement plan relevant to the current asset accounts of Dew. Using the exhibits, complete your proposal for the audit plan in the plan matrix.

For columns B, C, D, and E, select the best answer from the option list provided. An option may be used once, more than once, or not at all. In column B, identify whether each financial statement line item is in-scope or out-of-scope and the rationale for your determination. In column C, identify whether test of controls should be performed and the reason for your conclusion. In column D, identify the nature of substantive testing applicable to the line item. In column E, document whether the test population for each line item should be the full population or a sample population.

	A	B	C	D	E
1	Audit Engagement Plan: Current Assets
2	Financial Statement Line Item	In-Scope or Not-in-Scope	Perform Test of Controls (Y/N)	Substantive Test(s)	Test Population: Full or Sample?
3	Cash
4	Accounts receivable
5	Allowance for doubtful accounts
6	Prepaid rent
7	Inventory