CASE STUDY Gordon Ltd (Gordon) is a Victoria-based chain of discount stores selling a large range of continually changing merchandise. Gordon is a majority owned and run by Toby James. Toby handles all inventory purchases for the business, scouring auction houses in order to buy large lots of liquidated stock at bargain prices. Toby makes all decisions regarding what stock to purchase, the price to pay and, given that goods sold at auction have to be paid for immediately, is the sole cheque signatory. While you have determined that there are no controls over inventory purchases on which you can place reliance, you do note that Toby keeps all available documentation, which is passed to the accountant for checking and processing.

Required

You are planning your year-end substantive procedures for Gordon Ltd. Explain how the information provided would affect the nature, timing and extent of the substantive procedures.