问题详情

YouareanauditseniorofHessonite&Coandareintheprocessofreviewingtheinventorysystemdocumentationforyourauditclient,LemonQuartzCo(Quartz)whichmanufacturescomputerequipment.Thecompany’sfactoryandwarehousearebasedononelargesite,andtheiryearendis30June2016.Quartzisplanningtoundertakeafullinventorycountattheyearendofitsrawmaterials,workinprogressandfinishedgoodsandyouwillbeattendingthiscount.InpreparationyouhavebeenreviewingtheinventorycountinstructionsforfinishedgoodsprovidedbyQuartz.
Thecountwillbeundertakenby15teamsoftwocountersfromthewarehousedepartmentwithQuartz’sfinancialcontrollerprovidingoverallsupervision.Eachteamoftwoisallocatedanumberofbayswithinthewarehousetocountandtheyareprovidedwithsequentiallynumberedinventorysheetswhichcontainproductcodesandquantitiesextractedfromtheinventoryrecords.Thecountersmovethrougheachallocatedbaycountingtheinventoryandconfirmingthatitagreeswiththeinventorysheets.Whereadiscrepancyisfound,theynotethisonthesheet.
Thewarehouseislargeandapproximately10%ofthebayshavebeenrentedouttothirdpartieswithsimilaroperations;thesearescatteredthroughoutthewarehouse.Forcompleteness,thecountershavebeenaskedtocounttheinventoryforallbaysnotingthethirdpartyinventoriesonseparateblankinventorysheets,andthefinancedepartmentwillmakeanynecessaryadjustments.
SomeofQuartz’sfinishedgoodsarehighinvalueandarestoredinalockedareaofthewarehouseandallthecountingteamswillbegiventhecodetoaccessthisarea.Therewillbenodespatchesofinventoryduringthecountanditisnotanticipatedthattherewillbeanydeliveriesfromsuppliers.
Eachareaiscountedoncebytheallocatedteam;thesheetsarecompletedinink,signedbytheteamandreturnedaftereachbayiscounted.Asnotwoteamsareallocatedthesamebays,therewillbenoneedtoflagthatanareahasbeencounted.Oncompletionofthecount,thefinancialcontrollerwillconfirmwitheachteamthattheyhavereturnedtheirinventorysheets.
Required:
(a)InrespectoftheinventorycountproceduresforLemonQuartzCo:
(i)IdentifyandexplainFIVEdeficiencies;
(ii)Recommendacontroltoaddresseachofthesedeficiencies;and
(iii)DescribeaTESTOFCONTROLtheexternalauditorswouldperform.toassessifeachofthesecontrols,ifimplemented,isoperatingeffectively.
Note:Thetotalmarkswillbesplitequallybetweeneachpart.(15marks)
(b)Quartz’sfinancedirectorhasaskedyourfirmtoundertakeanon-auditassuranceengagementlaterintheyear.Theauditjuniorhasnotbeeninvolvedinsuchanassignmentbeforeandhasaskedyoutoexplainwhatanassuranceengagementinvolves.
Required:
Explainthefiveelementsofanassuranceengagement.(5marks)


请帮忙给出正确答案和分析，谢谢！