Purchase Solution

Computer-Assisted Substantive Tests for Inventory

Not what you're looking for?

Ask Custom Question

An auditor is conducting an audit of the financial statements of a wholesale cosmetics distributor with an inventory consisting of thousands of individual items. The distributor keeps its inventory in its own distribution center and two public warehouses. An inventory computer file is maintained on a computer disk and at the end of each day the file is updated. Each record of the inventory file contains the following data:

1. Item number
2. Location of item
3. Description of item
4. Quantity on hand
5. Cost per item
6. Date of last purchase
7. Date of last sale
8. Quantity sold during year

The auditor is planning to observe the distributor's physical count of inventories as of a given date. The auditor will have available a computer tape of the data on the inventory file on the date of the physical count and a general-purpose computer software package.

Required

The auditor is planning to perform inventory substantive tests. Identify the inventory tests and describe how use of the general-purpose software package and the tape of the inventory file data might be helpful to the auditor in performing such tests. Organize your answer in a table with one column for the inventory substantive test and one column for how generalized audit software might be helpful.

Purchase this Solution
Solution Summary

This explanation provides 10 inventory tests paired with the benefits of auditing programs in 710 words.

Solution provided by:
Hatim Baxamusa, MBA
Education
  • BSc , University of Calcutta
  • MBA, Eastern Institute for Integrated Learning in Management
Recent Feedback
  • "I read your comments, and thank you for this feedback. Do I need to find other studies that applied this methodology Ive used? That's where I'm stuck at."
  • "Thank you kindly sir. "
  • "Excellent and well explained. --Thank you kindly. "
  • "Awesome notes. I appreciate you."
  • "I have the follow-up project and I will assign that to you very soon. "
Purchase this Solution
Free BrainMass Quizzes
Operations Management

This quiz tests a student's knowledge about Operations Management

Understanding Management

This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.

Basics of corporate finance

These questions will test you on your knowledge of finance.

Learning Lean

This quiz will help you understand the basic concepts of Lean.

Paradigms and Frameworks of Management Research

This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.

View More Free Quizzes
Related BrainMass Solutions

  • Computer-Assisted Substantive Tests for Inventory Audit

    208565 Computer-Assisted Substantive Tests for Inventory Audit Just need some assistance getting my mind wrapped around this problem... 16-29 (Computer-assisted substantive tests for inventory) An auditor is conducting an audit of the financial statements

  • Audit Procedures & Objectives: acquisition & payment cycle

    Substantive tests of accounts payable emphasize the completeness of the transaction. For inventory, substantive tests focus on existence by a physical observation and counts.

  • Strategies for Testing Internal Controls and Risk

    B) The two strategies that might be used to support a low control risk assessment are: - Varying the degree and level of substantive tests, for example, with a small size of sample.

  • Tests of account balances are intended to obtain audit evide

    (c) Review consignment contracts and scan inventory records for inclusion of amounts for any consigned items not owned.

  • Trade off between substantive testing and testing of control

    a) access control risk at a low level b) perform both tests of controls and substantive tests on inventory c) perform only substantive tests on inventory d) perform only tests of controls on inventory They would likely skip testing controls and do

  • The following misstatements were detected by the auditor in

    The following misstatements were detected by the auditor in performing substantive tests of inventories during the audit of Wixon Company. 1. Slow-moving, defective, and obsolete items are included in the inventory but not properly identified.

  • Substantive Auditing Procedures for Inventory

    568142 Substantive Auditing Procedures for Inventory Brown, CPA, is auditing the financial statements of Big Z Wholesaling, Inc., a continuing audit client, for the year ended January 31, 20X2.

  • Attribute sampling and Variable sampling

    Thus Attribute sampling is most often used in compliance tests and Variable sampling is in substantive tests. The main reason for performing compliance tests is to reduce the amount of substantive tests that are required to be performed.

  • Apollo Shoes Casebook

    So the auditor should carry out detailed substantive procedures for testing inventory valuation. He should make or test finished goods valuation provisions. In the context of Apollo Shoes Company the company purchased a lot of computer equipment.

View More Related Solutions