Hi,

Can you please help with below exercise:

What are the two key assertions at risk and what two substantive audit procedures can be used due to following events: returns hit the company due to the faulty products, inventory turn-over decreased significantly compared to the previous FY, inventory has been moved from one location to six regional warehouses in previous FY, the Inventory on hand at end of previous year represented 22 per cent of sales and 18 per cent of sales in current year (what does this mean? does it mean that the sales are down and the level of inventory got up?). Also, the company will supply a large government department and in order to win the tender and prevent competitors from gaining a foothold in the public sector market, company agreed to supply the items at 10 per cent below their cost price. What auditor has to say about that sell? can they agree to it? if it's a sealed deal, they still have to include that in their opinion but can they make the management to change their decision?

What are the two key assertions at risk and what two substantive audit procedures can be used due to the following events:

a COMPANY acquired a small MANUFACTURER with loaned from a bank money. MANUFACTURER uses special formulas to create its product and only the owner of MANUFACTURER company knows the secret ingredients for the formulas. These secret ingredients are apparently documented and held by MANUFACTURER solicitors. The intellectual property related to the formulas has the potential to be both a material and valuable asset and has been recognized as an intangible asset arising from the acquisition in accordance with accounting standard AASB 3.