The information in the financial statements of your client, Honesty Company Limited, represents claims by management in relation to its responsibility to prepare financial statements which gives a true and fair view of the companys state of affairs and results of operations for the year under review. These claims are referred to as financial statements assertions.

Required:

As a member of the engagement team charged with the audit of the clients financial statements for the year ended October 31, 2019:

a) Outline the audit objectives for the audit of stock (inventories) in the financial statements. Your answer should relate to the financial statement assertions.

b) Discuss FOUR (4) sources from which evidence can be obtained to confirm the quantities and value of stocks.

c) Explain why stocks present high audit risk