(B) Significant Risk. (B) Assertion At Risk. (C) Stod +
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(b) Significant Risk
(b) Assertion at risk
(c) STOD + Audit Evidence
・Incorrect items were received and returned in full (risk - excess inventory and A/P. are recorded)
・ Incorrect quantity of goods were received and the excess was returned (risk - billed for the wrong quantity)
・Goods were not delivered by some suppliers and no action was undertaken (risk - billed for the items it did not receive)
(Could be over/understated)
・R & O
Inventory is misstated (inventory does not belong to the company)
・Perform a three-way match: Take a sample of transactions from purchases journal and agree with Suppliers invoice, Purchase order and Goods Received Note
・Recompute the math…show more content… Existence/Occurrence
・Inventory, A/P are overstated
・Purchases are overstated
・Observe and evaluate proper segregation of duties.
Overseas Suppliers - Foreign Exchange Risk.
・As transactions have to be recorded in AUS dollars, there may be errors in translation at transaction date.
・The foreign currency rates applied may be wrong, leading to loss of profits and loss of cash outflows.
・The translated values posted to the general ledger a/c may be misstated.
・Not all cost elements of the inventory may be included, such as duties and brokerage and freight.
Asset, liabilities, and income statement accounts could be over or understated:
・Purchases/cost of sales
・Recalculate the clerical accuracy on the supplier’s invoice, including discounts and freight.
・Obtain a List of foreign currency rates from the market and compare it to the rates that were applied for a sample of purchase transactions of that period
AE: Supplier Invoice; Quotes of Foreign Exchange rates - AUS Reserve Bank
Unauthorised access to the building and to the software by the terminated employees Jamie Chambers (terminated senior engineer) has approved 3 PO since he has terminated his work at Megatronics, one of which was > $5,000 and had to be approved by the PO manager. AVA (trading terms)
・A/P is over/understated
Classification (general ledger account coding)
・It is possible