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- Tina, we should pay attention to the valuation and allocation of the assertion level
- Ok, I got it.
- 15
- We need to verify whether G Food Co., Ltd has a large amount of damaged and expired inventory.
- COVID-19
- 16
- Ok, I got it.
- Due to the COVID-19,we can only hold a zoom meeting to conduct audit work.
- ZOOM
- 17
- As the inventory account may have the risk of material misstatement, the auditor team decided to pay attention to the valuation and allocation of the assertion level.
- The whole inventory cannot be checked by the auditor.
- So we have to select samples from inventory account for calculation
- The account requires substantive testing which is not entirely possible due to the restrictions imposed on account of the pandemic.Then the auditor team focus on the periodic inventory stock-take.
- Due to the impact of COVID-19, the auditor team chose to use zoom meeting to monitor the inventory count online.
- Errors cannot exceed 10 million.
- The profit before tax is 200 million
- The materiality is 5%
- The determination of the ending balance of inventory would also take into consideration statistical methods such as sampling as the whole of the inventory cannot be checked by the auditor. The inventory therefore would be checked for sampling error for the determination of the accuracy of the closing balance.
- The error is 12 million.
- 18
- After inventory verification, there are a large number of damaged and expired inventory, so it proves that inventory recorded at lower cost.
- 19
- Since the materiality is 5%, the profit before tax is 200 million, errors in the entire financial statement cannot exceed 10 million.
- 20
- The error of the entire inventory account is estimated by the sample to be 12 million, which is greater than 10 million, so there is a material misstatement.
- There is a material misstatement.
- Errors exceed 10 million.
- 21
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