Reference no: EM132989799

Question

You are the incharge auditor of an audit of a private company and you are reviewing the audit program of the audit junior. The junior noted the following 2 audit procedures in the audit program:

Audit Procedure 1-To verify the valuation of inventory, I will obtain from the warehouse manager the excel spreadsheet where she calculated the required yearend inventory write-off. I will review the formulas used in the calculation to make sure they are correct and recalculate all the totals.

Audit Procedure 2- To verify the rights & obligations of inventory, I will attend the yearend inventory count. While walking around the warehouse I will enquire employees who were taking the count about any possible inventory items that have been missed during the count. For example, items located on top shelves.

Required:

a) Does each audit procedure address the assertion being tested? If not, what assertion do you think the audit procedures cover?

b) For each audit procedure what is the degree of reliability of the evidence that the junior auditor plans to obtain, "low", "medium" or "high"? Explain your choice.

c) For each audit procedure provide an audit procedure that would provide more reliable evidence to address the assertion