You are the audit manager completing planning for your client RAM ltd, RAM is, market leader in the SOFT WAREAND COMPUTER PARTS DEVELOPING industry aimed at designing and developing SOFTWARE assistance.

SIZAR formed in 1970 and after a number of losses making years is now turning a substantial profit in a very competitive market. The company spends considerable amounts on research and development and prides itself on the success rate it has with new robotic designs.

RAM owns a number of very large warehouses in which inventory of small and large EQUIPMENTS and electronic parts are held, along with vast stores of advanced computer technology. The equipment's and parts are manufactured in another nearby security warehouse.

Products are then sold to specialized retailers of variety industries equipment and electronics, often on consignment basis. RAM also has three customers for whom they design and manufacture large custom-made computer parts and processes for these customer own internal uses. There are major contracts which often take nine or ten months to construct and worth millions of dollars. RAM has adopted a percentage completion method of accounting for these contracts.

For the last six months RAM has also been making sales of their major product lines to a few overseas customers. The CEO believes this could be a real growth area for the company in the near future.

RAM has also recently implemented a new top-of -the -range computer inventory system to help them track inventory stocks and individual product line performance in all division. The new system was designed and developed by external computer Consultant Company and so far, has been working well with no major errors noted

Required:

List two accounts as a result of your preliminary planning where you would concentrate audit effort for RAM Ltd., AND FOR EACH ACCOUNT:  STATE the most important audit assertion and explain why you chose the particular assertion, and recommend an audit procedure to perform, in order to gather audit evidence for that assertion