Solution-Outline an audit program of substantive testing

Outline an audit program of substantive testing

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Reference no: EM132719963

Problem - You are currently part of the audit team that is conducting the audit of Easy Rider Motorcycles Ltd (Easy Rider) for the year ended 30 June 2016. Easy Rider is a manufacturer of customised luxury high performance motorcycles. Your audit manager has asked you to oversee the audit of Easy Rider's inventory account balance, which is highly material. Easy Rider maintains details of stock quantities on its computer system. These stock quantities are updated from goods received notes and sales invoices. Due to the nature of its end product, Easy Rider holds a large number of highly specialised component parts, for which there is no secondary market. Easy Rider conducts a 'wall-to-wall' count of inventory, whereby all operations cease and they count all inventory in a single stock take.

Required -

(a) Identify the two key assertions at inherent risk of misstatement for Easy Rider's inventory, and explain the reasons why.

(b) Outline an audit program of substantive testing to be conducted on the inventory marks) account of Easy Rider. Provide a brief reason for each audit procedure chosen.

Reference no: EM132719963

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Outline an audit program of substantive testing

Reference no: EM132719963

Reference no: EM132719963

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