For this exercise, your client, Bright IDEAs Inc., has provided you with a listing of inventory as of year end, which includes current selling prices. To test whether profit margins appear adequate to justify the inventory valuation provision, the auditor must complete a series of related steps:

1. Import the clients database of inventory on hand (pp. 187200 of the IDEA Workbook).

2. Create an analysis of selling price changes (pp. 220225 of the IDEA Workbook).

3. Create an analysis of profit margins (pp. 226228 of the IDEA Workbook).

Required Data Files:

IDEA Data Analysis Workbook

Inventory 2015.asc

Required:

Complete all of the related steps shown above using IDEA. After completing each step, answer the following questions. (Enter your answers exactly as they appear in IDEA.)

a. Upon importing the Inventory 2015.asc data file, what is the total Number of Records shown by IDEA? What is the Control Total "Net Value" for the TOTALCOST Field shown by IDEA?

b-1. What percentage of inventory items have price movements in excess of 50%?

b-2. How many of these items experienced price increases?

b-3. How many of these items experienced price decreases?

b-4. Which direction of change would be most concerning to the auditor: a price increase or a price decrease?

c. What percentage of inventory items have negative profit margins?

d-1. Determine the effect that your findings in parts (b) and (c) would have on the auditor's assessment of the risk of material misstatement.

d-2. Determine which of the given accounts and assertions are most likely influenced by your findings.