Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You are a senior on the audit for the year ended 30 June 2018 of Office Supplies Ltd, A Perth-based manufacturer of customised office furniture.

You are a senior on the audit for the year ended 30 June 2018 of Office Supplies Ltd, A Perth-based manufacturer of customised office furniture. You are carrying out audit checks on cut-off at year end. Office Supplies maintains details of stock quantities on its computer and conducts a wall-to-wall count of inventory when all operations cease at 30 June, and all inventory is counted in a single stocktake. The bulk of inventory is held in two adjoining warehouses owned by Office Supplies. However, a material amount of special desk fittings is held in a separate warehouse in a difference suburb by a third party:

During the planning stage of the audit, you have discovered that the following potential misstatements may occur or exist:

  • Obsolete and damaged furniture fittings may be overlooked in the warehouse
  • Some empty containers may have been included in the inventory count due to poor labelling procedures
  • The lower of cost or net realisable value method may have been incorrectly applied

Based on your audit procedures completed during the planning stage, you have concluded that there are no relevant control activities that could prevent these potential misstatements from occurring

Required

(a) Outline the substantive test of detail that will substantiate each of the potential misstatement

(b) For each substantive test of detail that you outlined in (a), indicate the assertion at risk

Potential misstatement

(a) Substantive test of detail

(b) Assertion at risk

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Transportation Division Department Of Commerce Report On Preliminary Performance Audit Survey

Authors: Montana. Legislature. Office Of The Legi

1st Edition

1245445294, 978-1245445290

More Books

Students also viewed these Accounting questions

Question

Evaluate employees readiness for training. page 275

Answered: 1 week ago