Chapter 16, Comprehensive Question 16-26 & Comprehensive Question 16-29
Week 3, Individual Assignment
ACC 492
Resource: Modern Auditing
Prepare written answers to the following assignments * Ch. 16: Comprehensive Question 16-26 Evaluation of Internal Controls – Raw Materials and Supplies Inventory * Ch. 16: Comprehensive Question 16-29 Computer-Assisted Substantive Tests for Inventory
______________________________________________________________________________
Comprehensive Question 16-26
Evaluation of Internal Controls – Raw Materials and Supplies Inventory a. Identify the weaknesses in Jameson Company’s internal control procedures used for
(1) Ingredients inventory and
(2) Maintenance material and supplies inventory.
Ingredients Inventory
a. Weaknesses
1. Poor authority for receiving materials.
2. Receivers are currently accepting anything delivered and not taking a coordinated count
3. Ingredients inventory should not be stored in the production area.
4. There is only a periodic inventory system
5. There are no adjustments or reconciliation of the books to inventory
6. No appropriate cut-off procedures are being implemented.
Maintenance Materials and Supplies Inventory
a. Weaknesses
1. The access to inventory is unrestricted at various times.
2. There is a periodic inventory system.
______________________________________________________________________________
Comprehensive Question 16-29
Computer-Assisted Substantive Tests for Inventory
An auditor is conducting an audit of the financial statements of a wholesale cosmetics distributor with an inventory consisting of thousands of individual items. The distributor keeps its inventory in its own distribution center and two public warehouses. An inventory computer file is maintained on a computer disk and at the end of each day the file is updated. Each record of the inventory file contains the following data:
1. Item number
2. Location of item
3. Description of item
4. Quantity on hand
5. Cost per item
6. Date of last
ACC 492
Resource: Modern Auditing
Prepare written answers to the following assignments * Ch. 16: Comprehensive Question 16-26 Evaluation of Internal Controls – Raw Materials and Supplies Inventory * Ch. 16: Comprehensive Question 16-29 Computer-Assisted Substantive Tests for Inventory
______________________________________________________________________________
Comprehensive Question 16-26
Evaluation of Internal Controls – Raw Materials and Supplies Inventory a. Identify the weaknesses in Jameson Company’s internal control procedures used for
(1) Ingredients inventory and
(2) Maintenance material and supplies inventory.
Ingredients Inventory
a. Weaknesses
1. Poor authority for receiving materials.
2. Receivers are currently accepting anything delivered and not taking a coordinated count
3. Ingredients inventory should not be stored in the production area.
4. There is only a periodic inventory system
5. There are no adjustments or reconciliation of the books to inventory
6. No appropriate cut-off procedures are being implemented.
Maintenance Materials and Supplies Inventory
a. Weaknesses
1. The access to inventory is unrestricted at various times.
2. There is a periodic inventory system.
______________________________________________________________________________
Comprehensive Question 16-29
Computer-Assisted Substantive Tests for Inventory
An auditor is conducting an audit of the financial statements of a wholesale cosmetics distributor with an inventory consisting of thousands of individual items. The distributor keeps its inventory in its own distribution center and two public warehouses. An inventory computer file is maintained on a computer disk and at the end of each day the file is updated. Each record of the inventory file contains the following data:
1. Item number
2. Location of item
3. Description of item
4. Quantity on hand
5. Cost per item
6. Date of last