• Your  firm  is  the  auditor  of  Silverhill  Potteries,  which  is  a  wholesaler  of  pottery products  (eg  cups,  saucers,  plates,  mugs  etc),  and  you  are  carrying  out  the  audit for the year ended 30 April.
• You  have  been  asked  by  the  senior  in  charge  of  the  audit  the  audit  to  carry  out checks  on  cut-off  and  to  identify  stock  which  may  be  worth  less  than  cost  and  to check that it has been valued correctly.

The  company  has  a  computerised  inventory  control  system  which  records  receipts and  dispatches  of  stock,  current  stock  quantities  and  the  age  of  the  stock.   You attend a count of all the stock at the year end.

• You are required:
• (a)  To  explain  the  procedures  you  would  perform  to  confirm  that inventory, sales and purchases cut-off is accurate. (5 marks)
• (b)  Define  in  detail  the  basis  for  valuing  inventory  in accordance  with International Financial Reporting Standards. (3 marks) 
• (c)  (i)  State the types of stock which may be worth less than cost;  (2 marks)
•  (ii)  Describe  the  investigations  you  will  carry  out to  identify  this stock;   (5 marks)
•  (iii)  Describe  the  audit  work  you  will  carrying  out  to  determine  the net  realisable  value  of  the  stock  you  have  found  from  your investigations in part (c) (ii) above.  (5 marks)