Chapter 13, Problem 13.29P

a.

To determine

Concept Introduction:

Audit procedure is a method performed by the auditor, to gather the possible document that helps the auditors to make a strong conclusion. The audit procedure helps to determine the nature of the financial information provided by the customers and all kinds of risks that occur in the financial statements. Audit procedure performs different test of controls to avoid the risks.

To identify:The audit procedure that should be used by independent auditor that change when an entity utilizes a statistical sampling to determine inventory value.

b.

To determine

Concept Introduction:

Audit procedure is a method performed by the auditor, to gather the possible document that helps the auditors to make a strong conclusion. The audit procedure helps to determine the nature of the financial information provided by the customers and all kinds of risks that occur in the financial statements. Audit procedure performs different test of controls to avoid the risks.

10 normal audit procedures that should be performed to verify physical quantities.

Normal audit procedure to verify physical quantities when an entity conductsperiod physical counts of all, or part, of its inventory:

• The Auditor should recheck the current inventory count procedure and ensure whether they are approved.
• The auditor should oversight the physical count.
• The Auditor should make test count if it is necessary.
• The auditor should test a sample from the recorded inventory.
• The Auditor should select the sample items from the compilation engagement and record them into count data.
• The auditor needs to ensure the numbers of purchase and sales cutoff.
• The auditor should recheck the treatment provided to the merchandise.
• Auditor should assure about the merchandise available in the warehouse.
• Auditor should perform the analytical procedure to evaluate the inventory.
• Auditor should ensure whether all inventory recorded correctly and items are classified.