The Auditor Determines That Each of the Following Objectives Will

question 41

Essay

The auditor determines that each of the following objectives will be part of your audit of Bozington Co., Inc. For each audit objective, select a substantive procedure that would help to achieve that objective. Each of the procedures may be used once, more than once, or not at all.
Audit Objective
1. Establish the completeness of inventories.
2. Establish the accuracy of cost amounts of inventories.
3. Determine that the presentation and disclosure of inventories and cost of goods sold is adequate.
4. Establish that the client has rights to the recorded inventories.
5. Establish the existence of ending inventory. Substantwe Proceciures
a. Examine current vendors' price lists.
b. Review drafts of the financial statements.
c. Select a sample of items during the physical inventory count and determine that they have been included on count sheets.
d. Select a sample of rec orded items and examine supporting vendors' inwoices and contracts.
e. Select a sample of rec orded tems on count sheets during the physical inventory count and determine that itemsare on hand.
t. Test the reasonableness of general and administrative labor rates.

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Definitions:

Secondary Deviation

The process by which an individual's self-concept and behavior begin to change after society labels them as deviant, leading to further acts of deviance.

Primary Deviation

The initial act or acts of rule-breaking that may not affect an individual's self-image or lead to societal labeling as deviant.

Labeling Theory

A sociological theory suggesting that labeling individuals as deviant can influence their self-identity and behavior, possibly leading to further deviance.

Secondary Deviation

The stage in which an individual comes to accept the label of "deviant" and takes on a deviant identity as a result of societal reactions.