State the points of concern in your report to management with respect to the control issues and comment on their possible impact on your year-end audit work by identifying: a) weaknesses b) risks, and c) give recommendations.
State the points of concern in your report to management with respect to the control issues and comment on their possible impact on your year-end audit work by identifying: a) weaknesses b) risks, and c) give recommendations.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The DENR RO5 operates a perpetual inventory system and performs quarterly physical inventory counts to reflect actual quantities counted. During the auditor interim visit, the result of the last physical count is reviewed. It appears that several numbers of high-value items included in the records were not counted. Also, returns to the supplier are deducted from the physical inventory but are not recorded in the inventory records.
Required:
State the points of concern in your report to management with respect to the control issues and comment on their possible impact on your year-end audit work by identifying:
- a) weaknesses
- b) risks, and
- c) give recommendations.
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