FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Discuss how the inventory process supports the production planning process and the risks to the production process if inventory process control goals are not achieved. do not limit your discussion to losses from fraud.
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- Required information Potential Misstatements in the Auditing of Inventory Read the overview below and complete the activities that follow. Because of its importance and typically high dollar value on the balance sheet of a manufacturing entity, the audit of inventory is important and often high risk. As such, auditors must take additional care when auditing this area due to the capacity for both errors and fraud. CONCEPT REVIEW: When identifying misstatements in testing inventory, it is important to consider the control environment to determine if the misstatements found are indicators of client error or intentional fraud. 1. Inventories with a high risk of 2. Purchasing and cash disbursements can provide opportunity for by employees 3. considering information about the client and its environment, the auditors must assess the risks of material misstatement related to assertions about inventory may be warranted as a signficant risk 5. 4 Audit procedures for consignment inventory could…arrow_forward3arrow_forwardInspector expenses and other expenses that are designed to ensure quality or uncover defects are examples of prevention costs. ture or falsearrow_forward
- When evaluating inventory controls, an auditor would be least likely toa. Inspect documents.b. Make inquiries.c. Observe procedures.d. Consider policy and procedure manualsarrow_forwardA4arrow_forwardQuestion 6: What is the earnings threshold over which an employee whose filing status is Married Filing Separately will be subject to the additional Medicare tax? Answer: А. O $117,000 В. O $125,000 С. O S200,000 D. O $250,000arrow_forward
- Entity-level controls can have a pervasive effect on the entity's ability to meet the control criteria. Which one of the following is not an entity-level control? A. The period-end financial reporting process B. Controls to monitor results of the operations C. Controls to monitor the inventory taking process D. Management's risk assessment processarrow_forwardDiscuss how EDI dealing with sensitive information, such as inventory amounts and price data, is no longer private. What potential dangers exist if proper controls are not in place? Give an examplearrow_forwardQ.9.arrow_forward
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