Wholesale Business of Beast Ltd.

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

AUDIT AND ASSURANCE
1
Table of Contents
Answer to Question 1.................................................................................................................2
Part A.....................................................................................................................................2
Part B......................................................................................................................................2
Answer to Question 2.................................................................................................................3
Part A.....................................................................................................................................3
Part B......................................................................................................................................3
Answer to Question 3.................................................................................................................4
Part A.....................................................................................................................................4
Part B......................................................................................................................................4
Answer to Question 4.................................................................................................................5
Part A.....................................................................................................................................5
Part B......................................................................................................................................5
Reference....................................................................................................................................6

AUDIT AND ASSURANCE
2
Answer to Question 1
Part A
The case reveals the business of Beast Ltd which is engaged in Wholesale business
has changed its inventory valuation process from last in first out method to First in first out
method. This is a change in accounting policies and therefore the same needs to be reported.
The figure of inventory is material for a Wholesale business and therefore any misstatement
in the same needs to be considered by the auditor (Tsipouridou and Spathis 2014). The audit
manager of FairAudit in such a case would be issuing an adverse audit opinion considering
the materiality aspect of inventory which the change in the valuation method would bring into
the annual report.
Part B
The difference in the amount which would be created due to change in accounting
policy for measuring inventory would be impacting the financial position of the business. In
the first place as well, the application of Last in first out is not allowed under the provisions
of AASB 102 and it is further stated that it results in wrong valuation of inventory for the
business as the current costs of inventory are not reflected in the final value which is
portrayed (Omid 2015). Therefore, it can be said that the accounting team of Beast ltd has not
complied with relevant accounting standards and also not made necessary adjustments for the
change in the valuation technique for inventory which creates a material difference and
impacts the true and fair view of the business. Hence, it can be said that adverse report in
such a case is justified.