Discuss potential misstatements of inventory. and Discuss its content

Describe the auditors' objectives in the audit of inventories and cost of goods sold. The auditors objectives in the audit of inventories and cost of goods sold are to 1. Use the understanding of the client and its environment to consider inherent risks, including fraud risks, related to inventories and cost of goods sold. 2. Obtain an understanding of interual control over inventories and cost of goods sold. 3. Assess the risks of material misstatement and design tests of controls and substantive procedures that a Substantiate the exastence of inventories and the occurrence of transactions affecting cost of goods sold. b. Establish the completeness of recorded inventories. c. Verify the cutoff of transactions affecting cost of goods sold. d. Determine that the client has rights to the recorded inventories. c. Establish the proper valuation of inventories and the accuracy of transactions affecting cost of goods sold. f Determine that the presentation and disclosure of information about inventories and cost of goods sold are appropriate, including disclosure of the classification of inventories, accounting methods used, and inventories pledged as collateral for debt. In conjunction with the audit of inventories and cost of goods sold, the auditors also will obtain evidence about the related purchases, sales, purchase returns, and sales returns accounts