O Required information In this mini-case you will test inventory for EarthWear Clothiers. EarthWear has a calendar year-end and conducted their Inventory observation on January 1, 2017. Inventory was counted at two different foreign distribution centers (Germany and Japan) where the international Inventory is stored. There was no movement of inventory on January 1st. A brief description of the Inventory Count process has been provided below. Additional information regarding inventory counts is available in Chapter 13 Inventory Status Report Inventory Tags Germany Inventory Tags Japan Physical inventory Court Description To test the completeness of inventory (i.e., "floor to sheet"), begin with Work Paper 5-1 and note that some inventory items have already been completed. For the Inventory items not yet completed, locate the corresponding Inventory Count Tag and record the quantity from the tag onto Work Paper 5-1. Then locate the item on the Inventory Status Report and enter the quantity recorded onto Work Paper 5-1. Compare the two quantities recorded and if the count differs for an inventory item, briefly describe which management assertion(s) appear to be violated. (Leave no cells blank - be certain to enter "0" wherever required.) Work Paper 5-1 EARTHWEAR CLOTHIERS Inventory Floor to Sheet Test Counts December 31, 2016 GERMANY Quantity Quantity on Inventory Inventory Inventory Status Describe any Violations of Managements ID Description Count Tags Report Difference Assertions 101-2089 Medium T 32.789 32,789 shirt 102-5573 M Sweater 102-8637 XL Sweater 94,202 94,202 on o O 102.253 Phat 5 X 7 21 842 22 R42 EARTHWEAR CLOTHIERS Inventory Floor to Sheet Test Counts December 31, 2016 GERMANY Quantity Quantity on on Inventory Inventory Inventory Status Describe any Violations of Managements ID Description Count Tags Report Difference Assertions Medium T- 101-2089 32,789 32,789 shirt 102-5573 M Sweater 102-8637 XL Sweater 94,202 94,202 103-2538 Photo 5 X 7 23,842 23,842 0 Photo 11 X 103-7994 17 104-9326 Duffel Bag 7,560 7,560 EARTHWEAR CLOTHIERS Inventory Floor to Sheet Test Counts December 31, 2016 JAPAN Inventory ID Quantity Quantity on on Inventory Inventory Status Description Count Tags Report Medium T- 23,324 23,324 shirt Describe any Violations of Managements Assertions Difference 0 101-2089 102-5573 M Sweater 19,805 23,901 19,805 23,901 102-8637 XL Sweater 103-2538 Photo 5 X 7 103-7994 Photo 11 X 17 Date: 1/1/2017 Inventory No. Item Description Germany Japan Total 100-2545 Fishing Vest 11,894 9,498 21,392 101-1348 Small T-shirt 8,349 8,645 16,994 101-2089 Medium T-shirt 32,789 23,324 56,113 101-3573 Large T-shirt 28,239 2,342 30,581 102-5573 M Sweater 84,383 9,678 94,061 102-8637 XL Sweater 94,202 19,805 114,007 103-2538 Photo 5X7 23,842 23,901 47,743 103-5037 Photo 8 1/2 X 11 53,838 8,907 62,745 103-7994 Photo 11 X 17 0 18,234 18,234 104-3501 Briefcase 84,900 43,487 128,387 104.4510 Large suitcase 19,007 24,389 43,396 104-9326 Duffel Bag 7,560 18,345 25,905 We Staff Adit. Note: The Intro Station Report as gom to after the phone come completed. Th. Earthbhear itaff indiente th report flats all retus noted during the pharmal muntura sunts at the two internetimal lunt, RLT 1200 O O INVENTORY DATE LOCATION 01/01/2017 GERMANY ITEM INVENTORY DATE LOCATION 01/01/2017 GERMANY ITEM INVENTORY DATE LOCATION 01/01/2017 GERMANY ITEM INVENTORY DATE LOCATION 01/01/2017 GERMANY TEM 100-2545 101-1348 101-2089 101-3573 DESCRIPTION FISHING VEST QUANTITY DESCRIPTION SMALL T-SHIRT QUANTITY DESCRIPTION MEDIUM T-SHIRT QUANTITY DESCRIPTION LARGE T-SHIRT QUANTITY 11894 8349 32789 28239 COUNTED BY TOM JONES COUNTED BY TOM JONES CHECKED BY CHECKED BY COUNTED BY TOM JONES CHECKED BY Sheila Burton COUNTED BY TOM JONES CHECKED BY Sheila Beton TAG NO. 502 TAG NO. 541 TAG NO. 565 TAG NO. 597 O INVENTORY DATE LOCATION 01/01/2017 GERMANY INVENTORY DATE LOCATION 01/01/2017 GERMANY ITEM INVENTORY DATE LOCATION 01/01/2017 GERMANY ITEM INVENTORY DATE LOCATION 01/01/2037 GERMANY TEM 102-5573 102-8637 103-2538 103-5037 DESCRIPTION M SWEATER QUANTITY DESCRIPTION XL SWEATER GUANTITY DESCRIPTION PHOTO 5 X7 QUANTITY DESCRIPTION PHOTO 8 1/2 X 11 QUANTITY 84383 94202 23842 53838 COUNTED BY TOM JONES CHECKED BY COUNTED BY TOM JONES CHECKED BY Sheila Balon COUNTED BY TOM JONES CHECKED BY Sheila Motor DOUNTED BY TOM JONES CHECKED BY 614 TAG NO. 633 TAG NO. TAG NO. 747 TAG NO. 752 O O INVENTORY DATE LOCATION 01/01/2017 GERMANY ITEM INVENTORY DATE LOCATION 01/01/2017 GERMANY ITEM INVENTORY DATE LOCATION 01/01/2017 GERMANY ITEM INVENTORY DATE LOCATION 01/01/2017 GERMANY ITEM 102-5573 102-8637 103-2538 103-5037 DESCRIPTION M SWEATER QUANTITY DESCRIPTION XL SWEATER QUANTITY DESCRIPTION PHOTO 5 X 7 QUANTITY DESCRIPTION PHOTO 8 1/2 X 11 QUANTITY 84383 94202 23842 53838 COUNTED BY: COUNTED BY COUNTED BY: TOM JONES TOM JONES COUNTED BY TOM JONES CHECKED BY TOM JONES CHECKED BY CHECKED BY CHECKED BY: Sheila Beton Sheila Botox 747 TAG NO. 614 633 752 TAG NO. TAG NO. TAG NO. O O INVENTORY DATE LOCATION 01/01/2017 GERMANY ITEM INVENTORY DATE LOCATION 01/01/2017 GERMANY ITEM INVENTORY DATE LOCATION 01/01/2017 GERMANY ITEM INVENTORY DATE LOCATION 01/01/2017 GERMANY ITEM 103-7994 104-3501 104-4510 104-9326 DESCRIPTION PHOTO 11 X 17 QUANTITY DESCRIPTION BRIEFCASE QUANTITY DESCRIPTION LARGE SUITCASE QUANTITY DESCRIPTION DUFFEL BAG QUANTITY 9734 84900 19007 7560 COUNTED BY COUNTED BY TOM JONES CHECKED BY: Sheila Beton COUNTED BY TOM JONES CHECKED BY COUNTED BY TOM JONES CHECKED BY: TOM JONES CHECKED BY: Sheila Beton 762 802 824 839 TAG NO. TAG NO. TAG NO. TAG NO. INVENTORY DATE LOCATION 01/01/2017 JAPAN ITEM INVENTORY DATE LOCATION 01/01/2017 JAPAN ITEM INVENTORY DATE LOCATION 01/01/2017 JAPAN ITEN INVENTORY DATE LOCATION 01/01/2017 JAPAN ITE 100-2545 101-1348 101-2089 102-5573 DESCRIPTION FISHING VEST QUANTITY DESCRIPTION SMALL T-SHIRT GUANTITY DESCRIPTION MEDIUM T-SHIRT QUANTITY DESCRIPTION M SMEATER QUANTITY 9498 8645 23324 9687 COUNTED BY JUL SAMSON COUNTED BY: JUL SAMSON CHECKED BY COUNTED BY JUL SAMSON CHECTORY CHECKED BY COUNTED BY JUL SAMSON CHECKED BY Brady William 1261 TAG NO. 1210 1243 1334 TAG NO. TAG NO. TAG NO. O O INVENTORY DATE LOCATION 01/01/2017 JAPAN ITEM DRVENTORY DATE LOCATION 01/01/2017 JAPAN TEM INVENTORY DATE LOCATION 01/01/2017 JAPAN INVENTORY DATE LOCATION 01/03/2017 JAPAN EM 102-8637 103-2538 103-5037 103-7994 DESCRIPTION XL SWEATER QUANTITY DESCRIPTION PHOTO 5 X 7 QUANTITY DESCRIPTION PHOTO 8 1/2 X 11 QUANTITY OPTION PHOTO 11 X 12 QUANTITY 19805 23901 8907 18234 COUNTED BY COUNTED BY JUL SAMSON COUNTRY JUL SAMSON COUNTED BY JUL SAMSON CHERRY CHECKED BY CHECKED BY Brady ons 1386 TAG NO. JUL SAMSON Brady Moms 1441 TAG NO. Brady Williams 1464 1450 TAG NO TAG NO O O INVENTORY DATE LOCATION 01/01/2017 JAPAN ITEN INVENTORY DATE LOCATION 01/01/2017 JAPAN ITEM INVENTORY DATE LOCATION 01/01/2017 JAPAN INVENTORY DATE LOCATION 01/03/2017 JAPAN TE 102-8637 103-2538 103-5037 103-7994 DESCRIPTION XL SWEATER QUANTITY DESCRIPTION PHOTO S X7 QUANTITY DESCRIPTION PHOTO & 1/2 X 11 QUANTITY DESCRIPTION PHOTO 1 X 17 QUANTITY 19805 23901 8907 18234 COUNTED BY COUNTED BY COUNTEDDY JUL SAMSON COUNTED BY JUL SAMSON CHECKED BY JUL SAMSON CHECKED BY CHECKED BY JUL SAMSON CHECKED BY Brady Williams 1386 TAG NO. Brady Williams TAG NO. 1441 1450 Brady williams TAG NO. 1464 NO. O O INVENTORY DATE LOCATION 01/01/2017 JAPAN ITEM INVENTORY DATE LOCATION 01/01/2017 JAPAN ITEM WENTORY DATE LOCATION 01/02/2017 JAPAN 104-3501 104-4510 104-9326 DESCRIPTION BRIEFCASE QUANTITY DESCRIPTION LARGE SUITCASE QUANTITY DESCRIPTION DUFFEL BAG QUANTITY 43487 24389 18345 COUNTED BY COUNTER JUL SAMSON COUNTED BY JUL SAMSON CHECKED BY CHEMORY CHECKED BY JUL SAMSON Brily Willos 1566 LUANA 15051 1533 GTANO CANA is & Adams, CPAS Description of the inventory count process: EarthWear's Procedures: During EarthWear's year-end inventory count in each warehouse, representative of the company count all inventory items and record the count for each inventory item on an inventory "count tag." Once the count at a particular warehouse is finished, all tags are collected and compared with the Inventory Status Report. Corrections are recorded on the Inventory Status Report and entered into the Inventory program Auditor's Procedures: Inventory observation is a required procedure under Generally Accepted Auditing Standards. In addition to inquiry regarding the client's count controls and procedures and observing the client's overall inventory count process and the organization of the warehouse, the external auditor performs test counts on a sample of inventory items. Some of the selections are made from count tags, which are then traced to the inventory status report to verify that the inventory status report is complete and accurate. This procedure is often referred to as a "floor to sheet" test (i.e., all inventory items on the warehouse "floor" have been included in the inventory status report "sheet"), and is primarily a test for the completeness and accuracy assertions. The auditor also makes some test count selections from the inventory status report and vouches the selected inventory items to the corresponding inventory count taus to verify that inventory listed on the inventory status report exists and is accurate. This procedure is often referred to as a "sheet to floor" test (i.e., all inventory items included on the inventory status report "sheet" represent items that actually exist on the warehouse "floor"), and is primarily a test for the existence and accuracy assertions. The auditor signs his or her name on each count tag for which he or she has recounted the corresponding inventory to indicate that it has been independently verified. The auditor retains a copy of all of the count tags, even those that he or she does not verify. Tags that were not verified will not bear the auditor's signature Required information In this mini-case you will test inventory for EarthWear Clothiers. EarthWear has a calendar year-end and conducted their Inventory observation on January 1, 2017. Inventory was counted at two different foreign distribution centers (Germany and Japan) where the international inventory is stored. There was no movement of inventory on January 1st. A brief description of the Inventory Count process has been provided below. Additional Information regarding inventory counts is available in Chapter 13 Inventory Status Report Inventory Tags Germany Inventory Tags Japan Physical thertory Court Description To test the existence of Inventory (.e., "sheet to floor"), enter the quantities from the Inventory Status Report downloaded from the website for the items indicated on Work Paper 5-2. Some inventory items selected for review have already been completed. Please note that the order of the Inventory Status Report and Inventory Count Tag columns is the reverse of Work Paper 5-1 to reflect the change in the order of observation (.e. switching from "floor to sheet" to "sheet to floor"). Then locate the inventory Tag in the PDF files downloaded from the website to confirm the existence and accuracy of the inventory item. In an actual inventory observation, the auditor would make selections from the Inventory Status Report and the client would take the auditor to the actual Inventory item and the attached count tag. For this exercise, you will vouch the selections from the Inventory Status Report (le, the "sheet') to the tag provided in the file above (le, the "floor"), Compare the quantity from the Inventory Status Report with the quantity on the tag. For Inventory Items where the counts differ, briefly describe which management assertion(s) appear to be violated. (Leave no cells blank. be certain to enter "O" wherever required.) Work Paper 5-2 EARTHWEAR CLOTHIERS Inventory Sheet to Floor Test Counts December 31, 2016 GERMANY Quantity on Quantity on Inventory Inventory Describe any Violations of Managements Inventory ID Description Status Report Count Tags Difference Assertions 100-2545 Fishing Vest 11,894 11,894 101-1348 Small T-shirt 8,349 8,349 101-3573 Large T-shirt 0 yelleri Difference Assertions Status Report 11,894 8,349 Count Tags 11,894 8,349 Inventory ID Description 100-2545 Fishing Vest 101-1348 Small T-shirt 101-3573 Large T-shirt 103-5037 Photo 8 1/2 X 11 104-3501 Briefcase 104-4510 Large suitcase 53.838 53,838 1.1. 19,007 19,007 JAPAN EARTHWEAR CLOTHIERS Inventory Sheet to Floor Test Counts December 31, 2016 Quantity Quantity on on Inventory Inventory Status Count Describe any Violations of Managements Report" Tags Difference Assertions 9,498 9,498 8,645 8,645 Inventory ID Description 100-2545 Fishing Vest 101-1348 Small T-shirt 101-3573 Large T-shirt 8.907 8,907 O 103-5037 Photo 8 1/2 X 11 104-3501 Briefcase 104-4510 Large suitcase 24,389 24,389 O Please note that the order of the Inventory Status Report and Inventory Count Tag columns is the reverse of Part 1 to reflect the change in the order of observation (i.e., switching from "floor to sheet" to "sheet to floor")