IAS-2

Question 1

WIP-7.6 m, under construction, count on September 30,only 5 of 16 sites can visit for the auditor

Answer 1

WIP is a material balance
WIP valuation is judgmental area
Increased risk of detection risk
Risky to obtain evidence of WIP

Auditor -decide -which sites to be a attended
WIP meterail balance sites,increased risk for manipulation sites–attend

Not attending sites:
obtain and review documetnaion relatiin to controls on WIP count
Review reports from any expert used to value the WIP
Exception noted-(during count)-discuss with mgt

Question 2

Goods in transit-3 weeks,clause-co responsible for goods, as they leave the warehouse

Answer 2

Inventory should be recorded-when dispatched
Inventory-not recorded
Inventory & liabilities understated.

Discuss-the point-invnoetory is recorded
Review the contract-for the requirmet is actaully inplace
Review the controls -to ensure invntory recorded at th point of dispaacth

Question 3

production problem-affected quality-mgt investigates-issues can rectify or not

Answer 3

Inventory will be overvalued,
if the recertification is possible,the cost will increase as NRV will be lower
if cannot -rectify-inventory should -written off

testing-cost & nrv-affected pdtcs
ensure invneory on a line by line basis-valued correctly