Sarah has been assigned to Jewelry Warehouse (JW), a maker of inexpensive rings and necklaces. JW uses C-Grade gems in its products. This allows JW to sell nice looking products at a low price. Sarah has been granted almost full access to the inventory but is supervised as she goes through the plant, which she noted was clean and well organized.

The one area she was not permitted to go was the vault where the gold and silver were kept. The plant manager brought the metal bars out to her one by one to count. Sarah agreed the count to the amount claimed on the company records and recalculated the value of the inventory based on the prices paid by JW. This is sarah first assignment as an auditor.

Required

a) Identify some assertions that are at increased risk of a material misstatement.

b) In audit terms, identify the type of evidence obtained and whether you feel it is sufficient to support the inventory amount stated on the balance sheet.