The accuracy, valuation and allocation assertion of inventory is of key interest to the auditor because:   Question 18 options:   1)  the valuation of inventory is usually complex.   2)  inventory is more likely to be understated than overstated.   3)  it is difficult to obtain evidence for this assertion.   4)  All of the above.

Q: Which of the following management assertions is an auditor most likely testing if the audit…

A: Management Assertion:   Management assertion refers to the claim made by the management assuring…

Q: If the auditor conducts test of the inventory controls at an interim date, is it appropriate to…

A: As a part of audit procedure test of controls are used to test the effectiveness of a control used…

Q: An auditor most likely would analyze inventory turnover rates to obtain evidence concerning…

A: Inventory turnover rate is the rate which shows how many times a company has sold and replaced it's…

Q: Scope Limitations. Following are four possible scenarios that reflect scope limitations encountered…

A:

Q: In which of the following situations would observation not provide the most compelling audit…

A: Introduction:- Audit evidence includes all of the information used by the auditor to support the…

Q: Why do auditors consider inventory errors pervasive?

A:

Q: Explain whether or not analytical review procedures would be sufficient for the audit of the…

A: Auditing is the examination and verification of the financial statements prepared by the entity and…

Q: If an auditor performs a stocktake of the inventory of Station Ltd and selects items from the…

A: Auditing involves an independent examination of financial records of the entity with a view to…

Q: When auditing inventories, an auditor would least likely verify thata. All inventory owned by the…

A: Answer:   Option a

Q: attendance of the auditors during the physical inventory coun

A: Answered:

Q: 6. The auditors were not permitted to observe the taking of the client's physical inventory, a…

A: Auditing means the independent checking of company operation by outsider.

Q: When a company's financial statements are audited, the principal element an auditor reviews is the…

A: Audit is the process of verifying and examining the authenticity and accuracy of financial…

Q: Which of the following is an analytical procedure? a. Analysis of significant ratios and trends b.…

A: Analytical  procedures are performed to evaluate the financial information.

Q: Which of the following types of audit evidence can be considered the least reliable? a. Purchase…

A: Audit evidence is the data and information which is collected by an auditor by examining the…

Q: An auditor usually traces the details of the test counts made during the observation of physical…

A: An auditor traces the details of test counts of physical inventory to final inventory compilation in…

Q: If you are an auditor and assigned to audit inventory. So as an auditor 1. How do you ensure that…

A: Honor Code: Since you have posted a question with multiple sub-parts, we will solve the first 3…

Q: The following audit procedures are consistent with gathering evidence about the valuation assertion…

A: Accounts receivables are those accounts to whom business has made credit sales on account and amount…

Q: An auditor is examining a nonpublic company’s inventory procurement system and has decided to…

A: Auditing is a gathering of information and evaluation of evidence as to report on the degree of…

Q: An auditor selected items for test counts while observing a client’s physical inventory.The auditor…

A: Qualitative characteristics of Accounting Information System:   Qualitative characteristics are…

Q: when the auditor Watch employees count inventory to determine whether company procedures are being…

A: Ans. An auditor carries out various audit procedures like observation, inspection, confirmation,…

Q: onducting which of the following steps, the auditor can obtain sufficient and appropriate audit…

A: The sufficiency and appropriateness are the two components based on which the auditor decides on the…

Q: Which of the following best describes the reason that the auditors record their inventory test…

A: Working paper is the document prepared in the process of Audit. Working paper are prepared by…

Q: You are testing inventory.  You determined that inventory exists, nothing is missing from inventory,…

A: The following are some examples of inventory risks: Due to the difficulty of valuing inventory, it…

Q: What is the primary purpose of analytical procedures performed during the planning stages of the…

A: Solution: Analytical Procedures refers to the evaluation of financial information via identifying…

Q: Explain the significant inherent risks associated with inventory. Explain the process of physical…

A: Internal controls mean to control the internal activities of the company. the internal control is…

Q: A CPA conducts audit for ABC company. As a result of ABC management's refusal to permit the CPA to…

A: SOLUTION- AS MENTION IN THE QUESTION ABC MANAGEMENT REFUSE TO PERMIT CPA TO PHYSICALLY EXAMINE…

Q: The audit objective that all journal entries were included in the financial statements is related to…

A: These assertions are made by the management. These are the claims regarding certain aspects of the…

Q: Why is inherent risk for the existence of inventory an issue in the expenditure cycle audit?

A:

Q: which of the following regarding errors is not correct Select one: a. unintentional misstatement of…

A: It is pertinent to note that Fraud is an intentional act by the Management, Those charged with…

Q: Applying substantive tests to the details of asset and liability accounts as of an interim date,…

A: SOLUTION- Substantive testing is an audit procedure that examines the financial statements and…

Q: An auditor often tries to acquire background knowledge of theclient’s industry as an aid to audit…

A: Given: The gaining of knowledge by the auditor in differentiating obsolete and current inventory.

Q: When evaluating inventory controls, an auditor would be least likely toa. Inspect documents.b. Make…

A: Auditing:   In auditing, auditors verify the correctness and fair presentation of financial…

Q: By conducting which steps, the auditor can obtain sufficient and appropriate audit evidence…

A: Sometimes due to the nature of Business sometimes the inventory held by the business is under the…

Q: How could the auditors have determined that the inventory balance was materially misstated? What…

A: Auditor is the independent qualified personnel who is a professional certified CPA. Auditor is…

Q: STATEMENT 1: The broad categories of assertions are the basis of the auditor in develaping specific…

A: Management Assertion: It is the  claims made by members of management  and is used in regard to the…

Q: At the completion of an inventory observation, the controllerrequested the auditor to give him a…

A: Given case is: At the completion of an inventory observation, the controller requested the auditor…

Q: As part of your audit of a client’s inventory balance, you created an expectation of what should be…

A: SOLUTION- IF THE ESTIMATES MADE BY THE AUDITORS GIVES CONFUSING INVENTORY BALANCE , THE AUDITOR…

Q: During the audit of a large manufacturing company, the auditor did not observe all locations of…

A: Unqualified and standard wording.

Q: How does inventory control deficiencies affect the development of audit procedures for inventories

A: Answer: The audit procedures are to be designed such that the total audit evidences can be…

Q: What procedures must the auditor perform when gathering evidence related to contingencies? (Several…

A: Audit evidence: Audit evidence refers to the information and explanations used by the auditor in…

Q: Why is it important for auditors to obtain control information over inventory count sheets or…

A: Auditing inventory is the process of cross-checking financial records with physical inventory and…

Q: which six key factors commonly contribute to the risk of misstatement of the assertion of inventory?

A: The wrong information or incorrect accounting information represented in the financial statement is…

Q: As a result of management's refusal to permit the auditor to physically examine inventory,…

A: When auditor is restricted from obtaining sufficient audit evidences in relation to any item of…

Q: A typical substantive procedure for inventory balance and purchase transactions may include…

A: Should disclose separately in Financial statements and notes to accounts

Audit Procedures

Audit Procedures are methods and techniques performed by the auditor to determine the quality of financial information of clients, thereby expressing an opinion on true & fair view of financial statements and entity position. They are identified and applied at the planning stage of audit after determining audit objectives, scope, approach, and risk assessment.