Reference no: EM132819722

While assessing the risk of material misstatement and determining the appropriate response with regard to the inventory of Computing Solutions Limited (Computing Solutions) for the 30 June 2020 audit, you become aware of the following information:

1. The best-selling computer presentation package has been experiencing a high level of returns owing to suspected software problems.
2. Based on closing inventory, inventory turned over an average of 5.2 times in 2019 and 3.8 times in 2020.
3. Computing Solutions moved its inventory from a central warehouse to six new regional warehouses in March 2020.

REQUIRED
In the box below, provide your answers to the following questions:

Problem (a) Identify and explain the two key assertions at risk in relation to inventory, stating clearly the particular circumstances above that give rise to that risk.

Problem (b) Identify and describe two substantive audit procedures that you could perform in response to each risk identified above.