Exam 11: Audit of Acquisition and Payment Cycle and Inventory

Physical inventory procedures Discuss the procedures that the audit team will most likely perform during a physical inventory at the client locations.

A perpetual inventory system is preferable to a periodic system if adequately controlled and maintained because

Inventory obsolescence procedures Identify and describe at least four procedures the audit team may perform in order to determine potential obsolescence of items in the inventory balances.

Legal expenses are reviewed by auditors for possible litigation and related FAS 5 treatment.

The need for additional control procedures when using computer-generated purchase orders would be met by

A system of internal financial accounting controls for inventory would include all of the following except

Quality control in the manufacturing process is an operational concern and does not apply to auditor assessment of internal control.

Reconciliation of vendor statements to recorded payables provides assurance related to the completeness assertion.

Management may have incentive to fraudulently overstate inventory balances in order to cover up

Inventory turnover is often calculated by the auditor for proper disclosure in client financial statements.

Which of the following types of analysis provides useful evidence of multi-location clients?

The auditor should perform all of the following procedures related to the physical inventory count except

The client's legal expenses should be examined to

Purchasing is a separate function in many organizations due to all of the following rationale except which?

The auditor in making inquiries regarding the standard cost systems normally does not make which of the following inquiries?

Supply chain management has helped many companies improve the efficiency of operations.

An internal control benefit of centralized purchasing in an organization includes

Centralized purchasing List the advantages for implementing a centralized purchasing function.What are the disadvantages (if any)?

Inventory is a complex accounting and auditing area due to all of the following except

Open invoice files are reviewed subsequent to the year under audit in order to locate expenses that should be reclassified on the income statement.