Case 8.1: Laramie Wire Manufacturing: Using Analytical Procedures in Audit Planning

630 Words Oct 1st, 2012 3 Pages
Case 8.1: Laramie Wire Manufacturing: Using Analytical Procedures in Audit Planning 1. Perform analytical procedures to help you identify relatively risky areas that indicate the need for further attention during the audit, if any. 2. Focus specifically on each of the five management assertions (existence or occurrence, completeness, valuation or allocation, rights and obligations, and presentation and disclosure) for the inventory account. Link any risks you identified for this account in question 1 to the related management assertion. Briefly explain identified risks or issues for the inventory account that require further attention, if any. Background About Laramie Wire MFG.

1. The use of analytical procedures is one
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This will ensure that policy holders will have proper knowledge and have the information before one buys stock since Laramie is becoming an IPO. By doing so the Balance Sheets and revenue recognition will be properly stated and revenues won’t be inflated. Neo

2. As we use the management assertions to account for inventory there are a lot of scenarios that must be addressed.

1. Existence or occurrence, There should be a bar code system applied to all the inventory to ensure that all the items can be easily accounted for. By doing so, the inventory will not be misplaced, and will be a lot cheaper in the long run because then the inventory won’t need to be physically accounted for. On an annual basis, certain items should be manually counted to ensure accuracy.
2. Completeness, making sure that balance sheets and proper documentation is posted and in right order. These may include, revenue recognition and inventory identification.
3. Valuation or allocation, make sure proper write-offs are accounted for and properly recorded in the balance sheet. Ensure that Laramie uses the same valuation method during its recording phase. If there needs to be items that are no longer being used, they need to be allocated to its proper place.
4. Rights and obligations, the auditor and the company have the obligation to disclose findings and proper information to the public, especially

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