Audit and Assurance

Running head: AUDIT AND ASSURANCE
Audit and Assurance
Name of the Student
Name of the University
Author’s Note

AUDIT AND ASSURANCE1
Executive Summary
This current report has focused on the process of identifying and explaining the key assertions on
the process of auditing along with the risk that relates to the inventory of the business. It
identifies and describes the substantive audit procedures which would help in mitigating the risk
that has been identified in the study. The ASA 701 has been explained which mainly deals with
the communicating the key audit matters in the provided report that is prepared by the appointed
of the company.

AUDIT AND ASSURANCE2
Table of Contents
Introduction......................................................................................................................................3
Answer to question 1.......................................................................................................................3
Identifying and explaining two key assertions at risk in relation to inventory............................3
Identifying and describing two substantive audit procedures for response in each risk that are
identified......................................................................................................................................5
Substantive audit procedures for inventory valuation.................................................................5
Explaining the requirement of ASA 701 communicating the key audit matters along with
auditing standard..........................................................................................................................7
Answer to question 2.......................................................................................................................8
Identifying and explaining two key assertions at risk in relation to intellectual property
intangible assets...........................................................................................................................8
Identifying and describing two substantive audit procedure for response in each risk that are
identified......................................................................................................................................9
Explaining the requirement of ASA 701 communicating the key audit matters along with
auditing standard..........................................................................................................................9
Conclusion.....................................................................................................................................10
References......................................................................................................................................11

AUDIT AND ASSURANCE3
Introduction
Audit and assurance are vital for an organisation, as it involves the process of checking
the financial statement that has already been designed by the management of the organisation.
The analysis of the accounting entries and the financial records mainly points out the verification
of the assessment procedure and operations of the business. In this study, different situations has
been provided where the key assertion of risk is to be identified that relates to inventory and the
intellectual property that are associated with the company. Moreover, the substantive audit
procedure has also been identified with the risk that has been identified along with discussing the
requirement of the ASA 701 that mainly deals with the communication in the key audit matters.
The financial report of the company assure the process of analysis of the records as per the
accounting standard that helps in overall improving the policies as well as a quality of the report.
Answer to question 1
Identifying and explaining two key assertions at risk in relation to inventory
The assessment of material misstatement is directly associated with the company that is
Computing Solutions Limited which has been the bestselling computer package that mainly
experiences the high level of returns from their inventory. The suspected software problem that
is associated with the business points out the effective return on inventory that would be
beneficial for the company in their normal course of business (Bryan, Rafferty and Wigan 2017).
Both of the inventory of the company that is opening inventory as well as the closing inventory
has decreased in the current years which points out the inefficiency of the inventory that are
associated with the company. It can be clearly seen that the company that is Computing
Solutions limited has their inventory turnover of an average of 5.2 times and around 3.8 times in
the financial year 2019 which has drastically reduced over the time period of one year. The