Problem Set $1$

You are the audit manager in charge of the audit of Caro Ltd$.$ The company's year$-$end is $31$

December, and Caro has been a client for six years. The company purchases and resells

products for the energy industry including valves, fittings, pumps etc. Clients vary in size

from small operators to large companies. No manufacturing takes place in Caro.

Information on the company's financial performance is available as follows:

Other information

$$ The industry that Caro trades in has seen moderate growth of $6\%$ over the last year.

$$ Non$-$current assets mainly relate to company premises for storing inventory. Eight delivery vehicles are owned with a net book value of $$500,000.$

$$ One of the directors purchased a pump during the year.

$$ Inventory is stored in ten different locations across the country, with your firm having offices close to seven of those locations.

$$ A computerised inventory control system was introduced in August $2017.$ Inventory balances are now obtainable directly from the computer system. The client does not intend to count inventory at the year$-$end but rely instead on the computerised inventory control system.

Required

By reference to the information provided above, prepare the audit strategy for Caro for the year ending $31$ December $2017$