Reference no: EM132793951

Question - An auditor discovered the following matters while performing tests of controls:

1. The production supervisor believes he has good judgment about what customers will buy. He surprised the sales manager with a new product that was produced on December 24.

2. Raw materials were transferred to production but were not transferred in the accounting records.

3. Salaries of the sales department were charged to manufacturing overhead.

4. The materials-usage variance is unusually large because materials issued to product development were charged to production.

5. The work-in-process account is overstated because goods were not transferred out when they were completed.

6. The labor cost on one job is high because an employee completed a duplicate labor ticket.

REQUIRED -

a. What control would have prevented or detected each of the errors or irregularities?

b. What tests should the auditor perform to test each control?

c. To which financial statement assertion does each error or irregularity relate?