II. Critical Thinking and Writing Skills

In February, your new work assignment of work is the audit of Miramar Company's financial statement of 12/31/2021. The Manager in Charge gives the following audit assignment: Prepare a summary that describe the best practice in inventory accounting systems. The summary is going to use in the evaluation of Miramar Company systems.

III- Exercises

A. Explain why it is necessary to allocate the preliminary judgment about materiality to individual accounts (segments) in the financial statements. Also explain why allocating to balance sheet accounts is more common than allocating to income statement accounts.

B. Describe the audit risk model and each of its components

C. Using the Audit Program for Cash and Audit Program for Cash Extended, select 15 audit procedure and classify each procedure according to the types of audit evidence. Present your answer in the following table:

Audit Procedure	Type of Evidence

D. Complete the table with assertion, specific risk assumption and recommended audit procedure that apply:

Possible Misstatement	Assertion	Specific Risk	Audit Procedures
Cash is overstated because cash receipts reflected in the accounts do not exist or disbursement were not recorded.