Audit Assignment: Inventory and Intangible Assets

Audit Assignment

1
By student name
Professor
University
Date: 20 th Sep 2018.
Table of Contents
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Audit Assertions..........................................................................................................................................3
Question 1: Inventory..................................................................................................................................3
Key Assertions.........................................................................................................................................3
Substantive audit procedures..................................................................................................................4
Communicating Key Audit Matters in the Auditor’s Report....................................................................6
Question 2...................................................................................................................................................7
Key Assertions.........................................................................................................................................7
Substantive Audit Procedures.................................................................................................................9
Communicating Key Audit Matters in the Auditor’s Report....................................................................9
References.................................................................................................................................................12
Audit Assertions
Audit Assertions are the various claims that the management of any company make with
respect to the various elements of the financial statements making an opinion regarding various
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aspects that govern these elements. It is one of the best ways of making sure that books of the
company are free from all kind of misappropriates (Mock, et al., 2018). It also helps in making
claims whether there are any loopholes on part of the management in making sure that
appropriate controls are in place. It is the duty of the management to prepare the financial
statements and it is the duty of the auditor to comment on the viability of the same. The audit
assertions are mostly made on five characteristics that includes existence, valuation,
completeness, rights and obligations, disclosures made. In the given assignment, there are two
case studies that are related to two different companies to analyse the various assertions with
respect to specific elements of the balance sheet.
Question 1: Inventory
Key Assertions
In the given case the company named Computing Solutions deals in various inventories with
respect to computer related software goods. There are various aspects of their inventory that is
stated in the case study and two key assertions that can be identified with respect to that includes:
 Disclosure –AASB 102 deals with valuation and disclosure of inventory and it is
important that the management should comply with the same. It is important that all the
important elements with respect to the financial statements that affect the company and
its materiality level should be disclosed in the annual report of the company. This will
help the company and its management to maintain a transparent approach, in the given
case inventories are having an annual turnover of 5.2 times in 2017 and 3.8 times in
2018, this shows that there is a reduction in the overall movement of the inventory and
the company needs to state that. It can also be seen that the company is making change in
the accounting policy that deals with valuation of inventory, as the company has got a big
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