Reference no: EM133128725

Question - You are the auditor of W-Tech Sdn Bhd and have just attended the calculation process year -end inventory. W-Tech is a company that manufactures computer products such as keyboards, monitors, mice etc. by using computerized systems integrated capable of showing the number of inventories at a given time. During year -end inventory calculations, list various inventory categories (without quantity) has been printed from the system and the calculated inventory amount will be entered manually by storage store staff, and then compared with the quantity from the system. This system proved successful before but unfortunately, your notes show there are a number differences in inventory calculations at the end of the current year. You and the storage store staff are given calculation instructions the day before the calculation process inventory is scheduled to take place. However, this year the storage store was not packed well and the item is hard to find because it is not in the right area. Items for the same category is sometimes found in several different areas and several inventory items are not labeled correctly. Calculations are done in a hurry for close the deposit before public holidays and the staff available is not enough to run calculations correctly. Copies of inventory lists issued are not properly controlled, there are some significant differences between the quantities recorded and the records inside computer.

Required -

a) Explain FOUR (4) weaknesses of W-Tech Sdn Bhd's inventory calculation process.

b) Give FOUR (4) effects of internal control weaknesses in W-Tech on audit work.

c) After attending the customer inventory calculation, provide TWO (2) audit procedures that needs to be done by the auditor.

d) Explain TWO (2) alternatives if the stock calculation at the end of the year is not possible done.

e) Discuss TWO (2) methods that auditors can use to test value the lowest between cost and realizable value of inventory.