Vana Equipment Bhd (VEB) has a sophisticated stock reporting system that tracks stock movements throughout its distribution network. A 50% mark-up is automatically added to the costs of goods when they are shipped from the warehouse into retail stores.

Stock items held for more than six months are reported in order to determine if the items require markdown. Items identified for markdown must be authorised by the Financial Controller prior to being flagged in the system by entering code "M" next to the stock numberof a special entry screen. This automatically reduces the selling price of the item by 15%.

A stocktake is planned to coincide with the financial year end. All counted stock is documented on count sheets. Counted stock totals are entered into the system to provide information of variations between counted and recorded stock for subsequent investigations.

Jimmy, the assurance services partner, is keen to introduce computer assisted auditing echniques (CAATs) to assist in the audit of the stock related balances. He is also seeking our advice on the control that he could implement in preventing unauthorized access to he company stock reporting system.

Required:

i. Explain the control that could be used by Jimmy in preventing unauthorised access to he stock reporting system.

(4 marks)

ii. Explain any four (4) factors to be considered by the auditors in deciding whether to use CAATs.

(4 marks)

iii. Provide four (4) examples of potential CAATs that could be used to assist with the audit of stock balances of VEB.

(4 marks)