Auditing and Assurance: Resolving Inventory Related Risks for Computing Solutions Limited

The report aims to assessing the foundation of the risk that is being related to the problem that is associated with material misstatement and focusing in relation to determine the appropriate response embedding with resolution to the inventory related to Computing Solutions Limited. The best-selling computer presentation package is particularly involved with the protocol about inventory system where they receiving higher level of returns very effectively.

Running head: Auditing and Assurance
Auditing & Assurance
Name of the Student-
Name of the University-
Author’s note-

1Auditing & Assurance
Executive summary
The report aims to assessing the foundation of the risk that is being related to the problem that is
associated with material misstatement and focusing in relation to determine the appropriate
response embedding with resolution to the inventory related to Computing Solutions Limited.
The best-selling computer presentation package is particularly involved with the protocol about
inventory system where they receiving higher level of returns very effectively. The report is
specifically discussed about the resolution of experiencing higher-level of return from the
business. The proper reason behind the transformation has been defined effectively. Closing
inventory and the inventory turnover rate measuring during the period of 2018 was 5.2 times and
in the year 2019, it is usually measured that it rises up to 3.8 times. Key assertions taken at the
conditioning factor measuring at risk in relation to inventory system is efficiently discussed.
Identification and discovering the two types of substantive auditing procedure that is inherited of
corresponding respondents to all the types of risks that are mainly identified.
It can be concluded from the above topic that riskiness related to accordance of the materialistic
value assets which are accompanied with the calculation concept embedding of the generic
scenario. The substantive auditing procedure is hence helpful in the context of enhancement in
helping optimization.

2Auditing & Assurance
Table of Contents
Introduction......................................................................................................................................3
Discussions......................................................................................................................................3
Solution to question 1a)...............................................................................................................3
Solution to question 1ii)...............................................................................................................4
Solution to question 1 iii)............................................................................................................5
Solution to question 2i)................................................................................................................6
Solution to 2ii).............................................................................................................................6
Solution to question 2 iii)............................................................................................................7
Recommendations............................................................................................................................8
Reference List..................................................................................................................................9

3Auditing & Assurance
Introduction
The report is focused on the factor that it is inherited to following of assertions that are
indeed helpful to obtain the conception of determining the appropriate response in regarding to
the inventory system of Computer Solutions Limited. It focused on the entitlement in regarding
of best-selling presentation package in the computer world that is effectively discussed in this
report. In reference to the basic inventory system and considering with inventory turnover ratio it
is been focused in times where average ratio is generally discussed into the effect by analyzing
whether they are generating profits as expected or not. Identification of key assertions are
discussed in relation to the inventory system that helps to secure the manifestation of embedded
risk. The key auditing risk also following with auditing procedure are focused to perform
throughout the risk that is mainly identified effectively. Defining the risk in focusing the
intellectual property and also obtaining the materialization of intangible asset regarding to help
the managers to take up decisions.
Discussions
Solution to question 1a)
The key auditing assertions, which are mainly applied as the type of assertions to the
auditing function of the financial statement for the final year in which auditing is performed
according to the corporation act in Australia. It is also been done in order to prepare complete
financial statements for sorting with conditioning other sort of purpose. There are two assertions
which are mainly related to the conception of reality. These risks create awareness within the
clients, which causes them to avoid those companies, which directly effects business of them.
Inventory is defined as one of the biggest assets considering on the manufacturer’s point of view
which is located in the balance sheet of the company. However, it is even considered as one of
the toughest and even the hardest assets to measure, manufacture as well as it is quite difficult to
track (Mack et al. 2018). In relation to the market’s point of view, thousands of consumers from
whom transactions are flowed significantly through the inventory account providing each and
every year. In this context, numerous number of journal entries are in requirement of subjective
estimates which are mainly inhabited by allocating the overhead allocations and also considering
of the factor of daily access to inventory conditionings and significantly processing through the
condition of inventory standards by maintaining optimum records.
Inventory is the conditioning aspect which is easier to become vulnerable to fraud. It is
eventually closed out to the basis of cost of goods sold. It is considered as the expense account
that is however charged up with the respect to refer as the retained earnings accounted at the end
of the accounting period.
Formulae which is used for the process:
Opening inventory + purchases= Products available for sale
Products available for sale – ending inventory= Cost of goods sold

4Auditing & Assurance
This is the obtaining information which is mostly becoming the gateway for transferring
into fraud. It makes understandable for the retailers and the distributors. It do not even add value
to the products that is imported by them. The most supportive function or methodology which is
practiced introduced by charging the raw materials, direct labor and also the overhead.
Additional charges are also incurred by the production house when the production of
components is decided to derive as conditioning function that relates to outsourcing focusing to
the third party or to the subsidiary. This effect the company to become more vulnerable to fraud.
However, there are certain scenarios which is ensured by them to make over the conditioning
scenario in focusing to change specifically with including lower amount of cost to manufacture
the goods. First-in-first out and last-in-first-out are the techniques which are appropriately used
by them in maintaining the quality of the product (Griffin. 2018). However, when companies go
for more degree of complicating endurance there are higher chances of opportunity of the
employees to undergo with higher degree of fraud. Certain methods are acknowledged in the
context of how the business is operated by them. According to the procedure of business it
depends how fraudulent can occur in the firm and who will motivate the segment to develop
within the firm. It is mainly occurred within the small family structure where they usually
operate the business like families.
The second functioning scenario discusses about the topic is miss apportion. Misuse of
the assets in the industry causes a big problem in the conditioning where there are problems
which gets stolen very frequently. Construction workers often get used to it in order to get used
with the practice of misusing the assets in the company.
Solution to question 1ii)
Auditing procedure that are supposed to be practiced in this company with referring to
the inventory as an asset and it is also undergoing with conducting auditing of the inventory
based in the company’ structure. The massive structure that is being allotted to the functioning
element, which is helpful in the context of engaging into higher number of number of inventory
that is being practiced as the procedure (Davoudi et al. 2018). It is functioned as the comfortable
source of the valuation, which is being obtained as the valuation interprets of the financial
statements.
There are certain features which is mainly obtained during proceeding the auditing procedure.
Cutoff analysis is one of them which is obtained in the procedure where auditors are focused in
order to examine the structure by halting any of the further more receiving technic in the
warehouse during the time period of physical inventory counting term. Henceforth, there is no
conception of fraudulence in the scenario (Wang et al. 2017).
It is also practiced by the concept of observing the physical inventory count so that
owners are quite relieved in the context that the number count according to the inventory. This is
defined as the procedure which is mainly used in counting the inventory. The counting
procedure, which is mainly practiced in the process and it, helps to observe the counting
procedure, which is practiced to meet the target that is inherited during the starting procedure.
However, over trusting the employees’ causes him to feature the damage within the organization.
Owners believe that its employees cannot stand onto fraudulent activities that will not even
consider the situation which sustain to enact the situation condition. However, the inventory gets
stolen very frequently and it is becoming quite difficult for the people who are containing the
opportunity to steal and an employee rationalize of the theft of inventory system.

5Auditing & Assurance
The second functioning scenario discusses about the topic is miss apportion. Misuse of
the assets in the industry causes a big problem in the conditioning where there are problems
which gets stolen very frequently. Construction workers often get used to it in order to get used
with the practice of misusing the assets in the company. When there are certain situations which
happens to be stolen by the workers of the company. Suppose the carpet cleaner is cleaning up
the floor perfectly but analyzing the situation they somehow steal the inventory and not giving it
back with misusing the equipment affects the company or entity. It can be recommended that
managers shall not allow this problem to grow further and stand tall with increasing in the given
issue (Reitzig. 2014). The auditing team performs reconciliation of the inventory system in order
to trace the valuation of the physical inventory system focused in counting of the general ledger
in the financial segmentation of the company. This procedure helps to curb the risk which are
mainly assorted to the functioning segment of appropriations measured in the context of helping
out the scenario which mostly identifies the situation that controls misuse of the assets. Later it
reduces the possibility to enhancement of overcoming the problem in most effective manner.
Solution to question 1 iii)
Communication key auditors which are focused in auditing of financial report, which is
mainly recognized by giving appropriate attributes of the auditing applications through, complete
of historical financial information (Goldstein and Leitner. 2018). This is mainly important on the
context of knowing the exact reasons applicable in the resolution of auditing the financial
statements. However this standard mainly deals with the communication of key auditing matters
which is performed in requirement to enhance the responsibility authorized in the auditing
functions of the company. The report is mainly authorized to address both the judgment of the
auditor in order to focus on the communication process and also ensuring to the form of attribute
in the form of communication function. The purpose of this technique is endured for the purpose
in order to enhance communication value through the respective auditing report for providing the
higher degree of transparency requirement in order to perform. It is intended to assist the users
through communicating by key auditors for conditioning the understanding the resource of the
current period (Nicolescu. 2018). Communication allocated for key audit matter is recognized in
separate section of auditor’s report preparation concluding under the auditor’s report for focusing
on the proclaim in certain sort of circumstances associated under the auditing standard
application. Auditors are not interested to communicate in those matters in the key auditing
matters section where report is organized when auditors are required to modification of the
opinion standard are ensured with applying the opinion in focusing to the result or outcome of
the matter (Adler et al. 2018). Description allocated in each of the key types of audit matter in
the key auditing section focusing upon the auditor’s report in order to modify the disclosure
which is the most significance attribute of the concept.
Rules and regulations contributed through the public disclosure respected about the
matter. In considering the extreme circumstances related in determining the auditor which are not
eventually associated in order to communicate in the auditor’s report successfully. Significant
source of auditing judgment is proclaimed in relation to the critical accounting technique verified
by the financial report with empowering proper estimation. Material misstatement is mainly
referred though the obtaining of resources, which are fruitful in order to construct the betterment
of the financial, structure (Gomulkiewicz. 2018). Events and transactions are also loaded in order
to emphasize the overall feature of the auditing attention needed to capitalize the accordance of
need.

6Auditing & Assurance
Solution to question 2i)
Intangible assets are mainly referred as the frequent source of expend resources that are
identified or they incur liabilities in accordance to the acquisition, development, maintenance or
acquiring the enhancement of intangible resources. Technology aspiration of knowledge,
designing and implementing newly updated resources and the systems by including the license,
intellectual property, market knowledge and then they also incurs trademark that is also
conjugate withholding the knowledge of appropriate analysis of copyright, patents, software,
mortgage rights etc. However, the definition of an intangible assets are described in the process
controlling the assumption of resources that is identified with regards to control over the
existence of the future benefits through rendering the future scenario of economic benefits
(DeFond et al. 2018).
The other type of assertion which is being considered by the respect to government grant might
be acquired free of charge or it might be able to consider the nominal consideration. Government
in this context is featured on the positioning of allocating the entity focusing on intangible assets
mentoring the function of airport landing rights, licenses, operating radio and also the television
stations through inspiring the importing licenses. Intangible assets constitute to modify the
functioning of fair value. It is actually helpful in order to recognize the value of assets by
considering the nominal amount of value which is relation to the optimal attribution in referring
to intended usage of the products effectively. Internally generated goodwill are not even
recognized as an asset structure which is embedded in the focus of creation of intangible asset
that is embedded as an intangible asset created in generation of an identifiable source
specifically. Reliable assurance created to the generic source of combination created in order to
capture the organic representation in relation to the intangible assets which is mainly controlled
in relation to the entity.
Solution to 2ii)
Risk related to the resource in allocated through intellectual property association is done
in order to give an importance to the assets of the company where those are very much necessary
in combining the structure which is termed as the helpful functioning of organizing behavior. It
is the type of audit which is being done in relation to the provision of providing the assessment
of intangible assets of the company. It also helpful to the extent that is embedded through the
evaluation of strength and weakness associated in order to secure the functional dimension for
making the improvements inherited for the allocation of causing and capturing the sustainability
of future dimension of intellectual rights. The audit also considers in taking creativeness for the
making of allocation where the parent company can also allow the third party or the subsidiary
company of them to use the same logo or either inheriting the issue of curtaining of minimization
that is being issued effectively. To cover the risk of theft substantial ownership in consideration
of ownership interest is mainly attributed in providing condition to investigate properly that if
somehow it gets missing then insurance amount will be provided to the owner. Trademark,
copyright, patent are the trade protection attributes which are aligned in order to pay rights to the
owners.
Infringement issues are the auditing condition which is revealed in order to constitute the
systematic procedure in conditioning the timely manner in conditioning the intellectual property
right in relation to the proposed acquisition. In promoting to the intangible rights by continuing
to grow the importance where technology is kept secret to knockout the copying practice of

7Auditing & Assurance
technology by one company selecting to the other one (Allen, Ramanna and Roychowdhury.
2018).
Solution to question 2 iii)
Communication key auditors which remain attentive in auditing of financial report, which
is mostly familiar by charitable appropriate qualities of the auditing submissions through
comprehensive old financial information. This is primarily significant on the situation of
expressive the precise details appropriate in the determination of auditing the monetary reports.
However this ordinary mostly contracts with the message of important checking substances
which is achieved in obligation to improve the accountability legal in the auditing purposes of
the company. The boom is mainly approved to speech both the finding of the auditor in
command to emphasis on the message procedure and also guaranteeing to the procedure of
quality in the procedure of communication fortitude. The drive of this method is endured for the
drive in order to augment message worth finished the respective auditing report for providing the
higher degree of transparency requirement in order to perform. It is intended to assist the users
through communicating by key auditors for conditioning the understanding the resource of the
current period. Communication allocated for key audit matter is recognized in separate section of
auditor’s report preparation concluding under the auditor’s report for focusing on the proclaim in
certain sort of circumstances associated under the auditing standard application. Auditors are not
interested to communicate in those matters in the key auditing matters section where report is
organized when auditors are required to modification of the opinion standard are ensured with
applying the opinion in focusing to the result or outcome of the matter (Arrow, Bowles and
Durlauf. 2018). Description allocated in each of the key kinds of audit substance in the key
auditing unit concentrating upon the auditor’s shot in order to adapting the revelation which is
the most significance attribute of the concept.
Rules and regulations donated through the public expose appreciated about the substance.
In considering the extreme situations related in decisive the auditor which are not ultimately
related in order to interconnect in the auditor’s report positively. Momentous base of auditing
presiding is proclaimed in qualified to the critical accounting method validated by the financial
report with authorizing proper estimate. Material misstatement is mainly mentioned though the
procurement of resources which are productive in order to hypothesis the improvement of the
financial construction. Events and transactions are also encumbered in instruct in order to
highlight the general feature of the auditing courtesy wanted to capitalize the harmony of need.

8Auditing & Assurance
Recommendations
It can be recommended from the above topic that identification of the inventory relation
is discussed effectively which helps to determine the key assertions which are generally needed
in order to prove the effective evidence. Two of the key assertions are effectively ensured to
understand the eminent evolution of the concept. Identification of the substantive procedures are
effectively designed and discussed and outcomes are generated with the inheritance of the
responses acquired from the selected two risk assertions. Explanation of the requirement
considering the ASA 701 enhancing the communication key auditing matters helps to analyses
about providing the disclosures effectively. During the second part it is been discussed about
rationale determination achieved effectively. Intellectual property rights key assertions are
effectively discussed in order to analyze and description about the auditing procedure helping to
perform about consecutive procedure is been discussed effectively.

9Auditing & Assurance
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