Reference no: EM132611844

An audit partner, while reviewing a client's file, had flagged up that audit evidence relating to inventory and distribution cycle in this particular audit engagement is quite weak. The substantive testing for completeness was started from the sales invoice to other supporting documentation, rather than starting with the source document (such as the purchase requisition and purchase order).

The audit partner had indicated that the auditor had use substantive analytical review procedures when such procedures did not generate sufficient evidence.

The audit partner believed that in this case, more detailed testing is likely to be more efficient and generate the required levels of evidence to support the assertions.

Requirement:

Question 1: If you were the auditor, summarize and discuss how you will perform relevant substantive tests of details for inventory balances.