Chapter 11

Sharonda Redfield
Acct 4111
November 15, 2012
Chapter 11
1. The concern and control of materials in the logistics process from the acquisition of young materials to the delivery of finished products to the end user.
3. Continually update breeding on business risk
Analyze potential motivations to misstate accounts in the acquisition and payment cycle
Perform preliminary analytical procedures to trammel if unexpected relationships exist in the accounts
5. Auditor comp ars client analytics to quondam(prenominal) client performance, industry results, and auditors expectations
7. Pre-numbered requisition form completed and direct to purchasing
9.
Promotes efficiency and effectiveness
Eliminates potential favoritism
Reduces the opportunity for fraud
Centralizes control in ace function
11. Purchasing department
13. Proper authorization
Completeness of recording
Timeliness of recording
Correctness of valuation
15. Under- record purchase, overstate returns, or record to low the amount
17. The auditor should consider management is more likely to
Understate rather than overstate expenses
differentiate expenses as assets rather than vice versa
19. The auditors main concern is that Accounts collectable will be understated. Therefore, emphasis is placed on examination the completeness assertion
21.



Analytical procedures to find potential misstatements:
Calculate and analyze long horse and percentage change in inventory, cost of goods sold, and expense accounts
reason and analyze ratios like inventory turnover and number of days gross revenue in inventory
Prepare common sized income statement to identify cost of good sold or expense accounts that are out of line
23.
Variety (diversity) of items
High volume of activity
Various (sometimes complex) valuation
obstacle in identifying obsolete or defective inventory
Many frauds embarrass the inventory account
Easily transportable making it subject to geminate counting
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