The Auditor Would Like to Test the Existence and Accuracy

question 65

Multiple Choice

The auditor would like to test the existence and accuracy of the transfer of goods from the raw materials storeroom to the manufacturing assembly lines.Which of the following audit procedures should be used?

• A)Conduct a variance analysis of the costs associated with manufacturing,looking for gross profit fluctuations.
• B)Account for a sequence of raw material requisitions,examining details and looking for proper approvals.
• C)Look at overtime records to determine the amount and timing of overtime hours used in the manufacturing process.
• D)Inquire with the inventory custodian regarding procedures used to transfer raw materials to the production line.

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Definitions:

Budgetary Slack

The practice of underestimating revenues or overestimating costs when preparing a budget, to create a buffer that makes budget targets easier to achieve.

Revenue Projection

An estimate of the future sales and income generated by a company during a specific period, often used in budgeting and planning.

Quarterly Production Budget

A financial plan that outlines the expected production costs and output levels for a business over a three-month period.

Platinum

A precious metal with significant industrial and jewelry uses, known for its durability, rarity, and high melting point.