Case 8.1

Background: We are senior auditors assigned to the Laramie Wire Manufacturing Audit. This is the world-class form our slopped has conducted the audit for this company. Coincidently, we are the first firm chosen by Laramie Wire Manufacturing to do a full-scale audit of its financial statements. Our goal is to understand our clients business and identify potential risks and problem areas through analytic procedures for the upcoming IPO. These procedures are used to evaluate whether or non the three main management assertions (existence, completeness and military rating) are being followed. As focusing on each of the three assertions for the inventory account, we spy that there are some risky areas that indicate the gather up for further trouble during our audit. 1.The valuation assertion deals with whether assets, liabilities, and equity interests flummox been included in the financial statements at appropriate amounts. To shew the accuracy of three inventory accounts, we can multiply the salute per unit by the total units in the end of the year balance. stocktaking AccountMarket Price Per Unit heart UnitsExpected Value of armouryGiven Value of InventoryDifference Finished Goods Inventory0.008300,000,0002,400,0001,654,500745,500(31%) Copper Rod Inventory0.

4805,900,0002,832,0002,625,000207,000(7%) Plastics Inventory0.121,100,000132,000224,50092,500(41%) We can see that finished goods balance is $1,654,500, a 31% below what we estimate and plastics balance is $224,500, a 41% over expected value. We feel that this area needs especial(a) maintenance during the audit to ensure that the amounts are appropriate under valuation assertion and there arent any misstatements in these two accounts. Because the copper rod balance is $2,625,000, only 7% residue from what we estimate, we dont think it is material and needs extra attention. 2.Our group made an agreement that we should pay more attention to sales account during the audit because the... If you want to get a full essay, order it on our website: Orderessay

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