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 these stockquantities are updated from goods received notes and sales invoices. Office Supplies 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 different 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 one substantive test of detail that will substantiate each of the potential misstatements.

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