Fieldwork Case Warren Sports - Inventory Existence
Using your knowledge of Warren Sports from your SUA experience, develop an audit program for the inventory existence at December 31, 2022 assuming that inherent risk is elevated and control risk is low. Assume that you have also identified a significant risk relative to potential fraud manipulation in the recording of inventory quantities. Consider key controls that would be tested for this cycle and the related assertions for these controls. Also, for the key assertions identified for this cycle (based on risk), determine the significant procedures you would execute relative to Warren and how you would go about them. Discuss how you developed your audit program. Include an appendix with your procedures and reference the significant audit professional standards that apply.
From the Waren instructions:
"Ending Inventory - A physical inventory is taken on New Year's Day before business begins for the new year. The December 31, 2022 ending inventory as counted and priced by Waren's employees is stated in the transactions list (Doc No. 1). For an illustration of procedures used to record cost of goods sold and adjust the inventory balance for the year-end physical count, see pages 77-79 of the Systems Understanding Aid Reference book.