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Hana Ranch Company

Hana Ranch Company, which has never been audited, is asked on October 1 by its bank to arrange for a year-end audit. The company retains you to make this audit and asks what measures, if any, it should take to ensure a satisfactory year-end physical inventory. Perpetual inventories are not maintained. How would you answer this question? List any steps you would ask the client to take, and describe your plan as an auditor as to what you would look for and how you would approach the audit.

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Hana Ranch Company, which has never been audited, is asked on October 1 by its bank to arrange for a year-end audit. The company retains you to make this audit and asks what measures, if any, it should take to ensure a satisfactory year-end physical inventory. Perpetual inventories are not maintained. How would you answer this question? List any steps you would ask the client to take, and describe your plan as an auditor as to what you would look for and how you would approach the audit.

Since Hana Ranch has never been audited, the auditor would for the initial engagement, assess audit risk at a higher level to allow for a higher method of ...

Solution Summary

The expert determines how to make a satisfactory year-end physical inventory. Perpetual inventories which are not maintained are given.

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