For this week's discussion, please prepare your response to the requirement in the In-Class Team Case 12-42. This is for Auditing class.

Hovington, CPA, knows that while audit objectives relating to inventories may be stated in terms of the assertions as presented in this chapter, they may also be subdivided and stated more specifically. He has chosen to do so and has prepared the second column of the following table:

Financial Statement Assertion	Specific Audit Objective	Audit Procedure
	1. The entity has legal title to inventories.
	2. Recorded inventory quantities include all products on hand.
	3. inventories are reduced, when appropriate, to replacement cost or net realizable value.
	4. Cost of inventories is properly calculated.
	5. The major categories of inventories and their basis of evaluation are adequately reported in the financial statements.

Required: Assume that Hovington's client, a retail department store, does no production. For each specific inventoryaudit objective listed obove, select the most closely related financial statement assertion and the most appropriate audit procedure from the following:

Financial Statement Assertion

Audit Procedure

A. Completeness and cutoff B. Existence or occurance C. Presentation and disclosure D. Rights and obligations E. Valuation and accuracy

F. Examine Current vendors' price lists. G. Review drafts of the financial statements. H. Select a sample of items during the physical inventory count and determine that they have been included on the count sheets. I. Select a sample of recorded items and exemanine supporting vendors' invoice and contracts. J. Select a sample of recorded items on count sheets during the physical inventory count and determine that items are on hand. K. Test reasonableness of direct labor rates.

Financial statement assertions and audit procedures may be selcected once, more than once, or not at all.

Discuss why and/or on what basis you decided to match the assrtion(s) with a specific audit objective and the reason(s) for choosing the audit procedure(s) that you chose to test the assertion and/or satisfy the specific audit procedure.