Home Work Audit II

Name: Cindy

Number: 201850046

A. The problems faced by the auditor in the audit of inventory are:

1. Because the temperature at the storage facility is too low to allow one spend
more than 15 minutes inside and it is impractical to move items outside or
to defreeze the cold storage facilities, it is nearly impossible for the auditor
to take the actual count of the inventory.
2. The company did not have a solid base because they didn’t do the complete
check of the inventory. So the auditor will face a hardship when doing the
reverse calculation of the inventory. (reducing purchase and adding sales)

B. Audit steps that I would take to enable me to render unqualified opinion with
respect to the inventory
1. Do detailed calculation of the closing inventory on the date of the audit by
reducing purchase and adding sales, if possible using bills to know the
inventory value at the previous date.
2. Reconcile the inventory value at the previous date/the value obtained with
the value of inventory that the company record and take a note if there any
discrepancy.
3. Check the items that have been counted recently and do another reverse
calculation to know the present inventory so we can compare the record and
the physical inventory to know if there’s any difference or not.