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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AAA Exams › qs 28 Lamont (AAS 6/07)
b)ii) requires to find the audit evidence
Answer key states an evidence “Analytical procedures on inventory, such as month by month comparisons to the previous year, to try to ascertain why the value of inventory has increased so much this year”
How can the above procedure help?
“How can the above procedure help?”
Help what?
The question asks you to “State the audit evidence that you should expect to find”
Inventory – that we have not been allowed to look at! – by 50.75% compared with last year
We need to determine the reasons why this increase has occurred and one way that we can begin to try to find the cause is to look at the month by month comparison with last year’s equivalent figures
If the increase has been linear, that means that each month’s closing inventory shows and increase of more than $283,000 when compared with the previous month
How else would you suggest we start to try and find the reason for this excessive increase in inventory values?
OK?