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Samantha, EPA, has been assigned to audit the accounts receivable and inventory of Tasty Treats Inc., a large distributor of food products [canned goods, rice,

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Samantha, EPA, has been assigned to audit the accounts receivable and inventory of Tasty Treats Inc., a large distributor of food products [canned goods, rice, frozen foods]. Tasty Treats Inc. has a December 31 year end. Tasty Treats Inc. imports a variety of food products from various European countries to its central warehouse in Halifax and distributes the goods to various grocery chains across Canada. Tasty Treats customers consist of two large national grocery chain operators as well as approximately EDD small independent grocers. The two large national grocers make up approidrnately 40% of Tasty Treats' acoJunts receivable balance. In order to facilitate distribution to central Canada, Tasty Treats Inc. also maintains inventory in several off-site warehouses. Samantha estimates that inventories and accounts receivable make up approximately 35% and 30% of total assets, respectively. Required a. Provide two examples of the risks of material misstatement for the inventory and accounts receivable balances at Tasty Treats. {2 marks] b. Samantha was provided with a detailed aocounts receivable sub-ledger and an open invoice file at year end in two electronic computer fes. The sub- ledger listed eadi customer, the customer's credit limit, the amount owing at year end, and an aging classification {El to 3D days, greater than 34] days old, greater than ll days old, and greater than 90 days old]. The open invoice file Listed all unpaid invoices by customer. For each invoice listed in the open invoice le, she was provided with the customer name, the invoice number, the date of the invoice, and the amount. Provide two examples of computer- assisted audit techniques that Samantha could perform on the accounts receivable sub-ledger file and open invoice file. Samantha has access to only these files. {2 marks} c. Meetings with the inventory manager reveal that a material amount of inventory is located offsite in warehouse outlets and on consignment. List two procedures that Samantha should conduct. {2 marks}

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