Required information Potential Misstatements in the Auditing of Inventory Read the overview below and complete the activities that follow. Because of its importance and typically high dollar value on the balance sheet of a manufacturing entity, the audit of inventory is important and often high risk. As such, auditors must take additional care when auditing this area due to the capacity for both errors and fraud. CONCEPT REVIEW: When identifying misstatements in testing inventory, it is important to consider the control environment to determine if the misstatements found are indicators of client error or intentional fraud 1. Inventories with a high risk of 2. Purchasing and cash disbursements can provide opportunity for by employees considering information about the client and its environment, the auditors must assess the 3 risks of material misstatement related to assertions about inventory may be warranted as a signficant risk 5 4 Audit procedures for consignment inventory could include a comparison of the physical inventory with the client's Tests used to help identify the structure of controls help to evaluate the client's internal control
Required information Potential Misstatements in the Auditing of Inventory Read the overview below and complete the activities that follow. Because of its importance and typically high dollar value on the balance sheet of a manufacturing entity, the audit of inventory is important and often high risk. As such, auditors must take additional care when auditing this area due to the capacity for both errors and fraud. CONCEPT REVIEW: When identifying misstatements in testing inventory, it is important to consider the control environment to determine if the misstatements found are indicators of client error or intentional fraud 1. Inventories with a high risk of 2. Purchasing and cash disbursements can provide opportunity for by employees considering information about the client and its environment, the auditors must assess the 3 risks of material misstatement related to assertions about inventory may be warranted as a signficant risk 5 4 Audit procedures for consignment inventory could include a comparison of the physical inventory with the client's Tests used to help identify the structure of controls help to evaluate the client's internal control
Auditing: A Risk Based-Approach (MindTap Course List)
11th Edition
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Chapter11: Auditing Inventory, Goods And Services, And Accounts Payable: The Acquisition And Payment Cycle
Section: Chapter Questions
Problem 32CYBK
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Question
![Required information
Potential Misstatements in the Auditing of Inventory
Read the overview below and complete the activities that follow.
Because of its importance and typically high dollar value on the balance sheet of a manufacturing
entity, the audit of inventory is important and often high risk. As such, auditors must take additional
care when auditing this area due to the capacity for both errors and fraud.
CONCEPT REVIEW:
When identifying misstatements in testing inventory, it is important to consider the control environment
to determine if the misstatements found are indicators of client error or intentional fraud.
1. Inventories with a high risk of
2. Purchasing and cash disbursements can provide opportunity for
by employees
3.
considering information about the client and its environment, the auditors must assess the
risks of material misstatement related to assertions about inventory
may be warranted as a signficant risk
5.
4
Audit procedures for consignment inventory could include a comparison of the physical inventory
with the client's
of controls help to evaluate the client's internal control
Tests used to help identify the
structure](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff133ec68-eefc-4b99-9ed5-ba57df0515f6%2Fc8571b4b-56b2-42e1-999f-c97225f2c476%2F1s83lf1_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Required information
Potential Misstatements in the Auditing of Inventory
Read the overview below and complete the activities that follow.
Because of its importance and typically high dollar value on the balance sheet of a manufacturing
entity, the audit of inventory is important and often high risk. As such, auditors must take additional
care when auditing this area due to the capacity for both errors and fraud.
CONCEPT REVIEW:
When identifying misstatements in testing inventory, it is important to consider the control environment
to determine if the misstatements found are indicators of client error or intentional fraud.
1. Inventories with a high risk of
2. Purchasing and cash disbursements can provide opportunity for
by employees
3.
considering information about the client and its environment, the auditors must assess the
risks of material misstatement related to assertions about inventory
may be warranted as a signficant risk
5.
4
Audit procedures for consignment inventory could include a comparison of the physical inventory
with the client's
of controls help to evaluate the client's internal control
Tests used to help identify the
structure
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