Can you please help me with the solution to the assignment?
Styles Guidance Context This case assignment relates to review of inventory count procedures of a client, identifying a deficiency in the inventory count procedure, suggest a control for inventory count procedure and then designing test of controls. When reviewing the case, first understand your role and put on the lenses of the auditor to see what are the auditor will be concerned about. This will help you to have proper context when formulating your response to the assignment. In the last class, we had discussed the importance of control risk to plan the audit. In assessing control risk, an auditor first obtains an understanding of controls and evaluates whether those controls exist. Then auditor makes a preliminary assessment of control risk. If an auditor wants lower control risk, then he will need to select the key controls and perform test of controls. Test of controls are procedures to test whether the control is working effectively. The results of the test of controls is used to confirm whether the control risk evaluated as low is actually low. Controls When reviewing controls, the following are some suggested questions that you should be asking in assessing controls (list is not exhaustive): o Is there segregation of duties? Need separation of duties between accounting and custody of assets. Need separation of duties between preparer and reviewer Example: Is the department performing inventory count the same department that has been in charge of the inventory day to day responsibilities (warehouse) Is the same person(s) performing the inventory count without separate person reviewing the count?o What assertions is the procedure trying to achieve? - For inventory count, the client would want to make sure that the inventory is complete, exists and safeguarded. Example: . Does the inventory count sheet a print out from accounting system? If you are just confirming the amounts in in accounting records, then the procedure will not test completeness. Inventory counts should be done separately and then compared to accounting records. . Is consignment inventory separately placed so that it does not get counted with company owned inventory? . Is special access to valuable assets given to appropriate people and is it removed after the inventory count procedure is completed? How does auditor know that all inventory count sheets have been returned? Are some missing? Suggested Format The table below is a suggested format to provide response to the question in the assignment. Please try to follow this format. Here is an example of how to fill it out. Deficiency Control Test of Control Indicate the deficiency in | Indicate the control that Indicate the test of inventory count could be added to control that would be procedure inventory count performed by auditor ifSuggested Format The table below is a suggested format to provide response to the question in the assignment. Please try to follow this format. Here is an example of how to fill it out. Deficiency Control Test of Control Indicate the deficiency in |Indicate the control that Indicate the test of inventory count could be added to control that would be procedure inventory count performed by auditor if procedure to address the the control is deficiency implemented Example Inventory is counted by Inventory should be Auditor would attend year- personnel who are in. counted by personnel in end count and enquire charge of day-to-day accounting or another which department they are responsibilities. If same department to have working in. Also inspect to personnel performs independence in inventory ensure that results of the inventory count then frauds count count are communicated to and risks can be hidden or personnel outside of the not detected. area inventory personnel work in
