Determine the inventory turnover ratio

Reference no: EM132762899

Question: You are auditing Grey Pty Ltd (Grey). You are at the planning stage of the audit and you ask members of your audit team to suggest how to optimise evidence collection so that you have reliable evidence and stay within budget for the audit. Your team members are enthusiastic about being asked to contribute and make many suggestions. Your assistant records the suggestions and lists them for you. The list includes the following suggestions, which are not in any particular order.

a. Inspect the policy manual to determine the nature of internal controls over the receipt of goods.

b. Inspect the general ledger account to ascertain the ending cash balance.

c. Determine the inventory turnover ratio.

d. Perform a bank confirmation.

e. Visit the warehouse and observe the processing of goods received.

f. Enquire with management about the condition of inventory.

Required: The list above contains three pairs of statements. Each pair relates to a specific item that is to be audited. For each pair, identify the audit evidence gathering procedure that you believe to be the more reliable, and the procedure you believe to be the less reliable. Explain your selections.

Reference no: EM132762899

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