To test the existence of inventory (i.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 (i.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 (i.e., the "sheet") to the tag provided in the file above (i.e., 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 "0" wherever required.)

Description of the inventory count process:

EarthWears Procedures: During EarthWear's year-end inventory count in each warehouse, representatives 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.

Auditors Procedures: Inventory observation is a required procedure under Generally Accepted Auditing Standards. In addition to inquiry regarding the clients count controls and procedures and observing the clients 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 tags 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 auditors signature.

Inventory Status Report

International Warehouses

Date: 1/1/2013

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 5 X 7 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

W&A Staff Auditor Note:

This Inventory Status Report was given to us after the physical counts were completed. The EarthWear staff indicate this

report reflects all corrections noted during the physical inventory counts at the two international locations.

RLT

1/1/2013

INVENTORY DATE LOCATION

TAG NO. 502

ITEM:

01/01/2013 GERMANY

100-2545

FISHING VEST

COUNTED BY:

CHECKED BY:

11894

TOM JONES

DESCRIPTION

QUANTITY

INVENTORY DATE LOCATION

TAG NO. 541

ITEM:

01/01/2013 GERMANY

101-1348

SMALL T-SHIRT

COUNTED BY:

CHECKED BY:

8349

TOM JONES

DESCRIPTION

QUANTITY

INVENTORY DATE LOCATION

TAG NO. 565

ITEM:

01/01/2013 GERMANY

101-2089

MEDIUM T-SHIRT

COUNTED BY:

CHECKED BY:

32789

TOM JONES

Sheila Barton

DESCRIPTION

QUANTITY

INVENTORY DATE LOCATION

TAG NO. 597

ITEM:

01/01/2013 GERMANY

101-3573

LARGE T-SHIRT

COUNTED BY:

CHECKED BY:

28239

TOM JONES

Sheila Barton

DESCRIPTION

QUANTITY

INVENTORY DATE LOCATION

TAG NO. 614

ITEM:

01/01/2013 GERMANY

102-5573

M SWEATER

COUNTED BY:

CHECKED BY:

84383

TOM JONES

DESCRIPTION

QUANTITY

INVENTORY DATE LOCATION

TAG NO. 633

ITEM:

01/01/2013 GERMANY

102-8637

XL SWEATER

COUNTED BY:

CHECKED BY:

94202

TOM JONES

Sheila Barton

DESCRIPTION

QUANTITY

INVENTORY DATE LOCATION

TAG NO. 747

ITEM:

01/01/2013 GERMANY

103-2538

PHOTO 5 X 7

COUNTED BY:

CHECKED BY:

23842

TOM JONES

Sheila Barton

DESCRIPTION

QUANTITY

INVENTORY DATE LOCATION

TAG NO. 752

ITEM:

01/01/2013 GERMANY

103-5037

PHOTO 8 1/2 X 11

COUNTED BY:

CHECKED BY:

53838

TOM JONES

DESCRIPTION

QUANTITY

INVENTORY DATE LOCATION

TAG NO. 762

ITEM:

01/01/2013 GERMANY

103-7994

PHOTO 11 X 17

COUNTED BY:

CHECKED BY:

9734

TOM JONES

Sheila Barton

DESCRIPTION

QUANTITY

INVENTORY DATE LOCATION

TAG NO. 802

ITEM:

01/01/2013 GERMANY

104-3501

BRIEFCASE

COUNTED BY:

CHECKED BY:

84900

TOM JONES

DESCRIPTION

QUANTITY

INVENTORY DATE LOCATION

TAG NO. 824

ITEM:

01/01/2013 GERMANY

104-4510

LARGE SUITCASE

COUNTED BY:

CHECKED BY:

19007

TOM JONES

DESCRIPTION

QUANTITY

INVENTORY DATE LOCATION

TAG NO. 839

INVENTORY DATE LOCATION

TAG NO. 1210

ITEM:

9498

01/01/2013 JAPAN

100-2545

FISHING VEST

COUNTED BY:

JUL SAMSON

CHECKED BY:

DESCRIPTION

QUANTITY

INVENTORY DATE LOCATION

TAG NO. 1243

ITEM:

8645

01/01/2013 JAPAN

101-1348

SMALL T-SHIRT

COUNTED BY:

JUL SAMSON

CHECKED BY:

DESCRIPTION

QUANTITY

INVENTORY DATE LOCATION

TAG NO. 1261

ITEM:

23324

01/01/2013 JAPAN

101-2089

MEDIUM T-SHIRT

COUNTED BY:

JUL SAMSON

CHECKED BY:

Brady Williams

DESCRIPTION

QUANTITY

INVENTORY DATE LOCATION

TAG NO. 1334

ITEM:

9687

01/01/2013 JAPAN

102-5573

M SWEATER

COUNTED BY:

JUL SAMSON

CHECKED BY:

DESCRIPTION

QUANTITY

INVENTORY DATE LOCATION

TAG NO. 1386

ITEM:

19805

01/01/2013 JAPAN

102-8637

XL SWEATER

COUNTED BY:

JUL SAMSON

CHECKED BY:

Brady Williams

DESCRIPTION

QUANTITY

INVENTORY DATE LOCATION

TAG NO. 1441

ITEM:

23901

01/01/2013 JAPAN

103-2538

PHOTO 5 X 7

COUNTED BY:

JUL SAMSON

CHECKED BY:

Brady Williams

DESCRIPTION

QUANTITY

INVENTORY DATE LOCATION

TAG NO. 1450

ITEM:

8907

01/01/2013 JAPAN

103-5037

PHOTO 8 1/2 X 11

COUNTED BY:

JUL SAMSON

CHECKED BY:

DESCRIPTION

QUANTITY

INVENTORY DATE LOCATION

TAG NO. 1464

ITEM:

18234

01/01/2013 JAPAN

103-7994

PHOTO 11 X 17

COUNTED BY:

JUL SAMSON

CHECKED BY:

Brady Williams

DESCRIPTION

QUANTITY

INVENTORY DATE LOCATION

TAG NO. 1505

ITEM:

43487

01/01/2013 JAPAN

104-3501

BRIEFCASE

COUNTED BY:

JUL SAMSON

CHECKED BY:

DESCRIPTION

QUANTITY

INVENTORY DATE LOCATION

TAG NO. 1533

ITEM:

24389

01/01/2013 JAPAN

104-4510

LARGE SUITCASE

COUNTED BY:

JUL SAMSON

CHECKED BY:

DESCRIPTION

QUANTITY

INVENTORY DATE LOCATION

TAG NO. 1566