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Hi sir for june 2014 exam question 3a. In the answer key, for the third auditor’s response it is stated as
“The completeness of the continuous (perpetual) inventory counts should be reviewed. In addition, the level of adjustments made to inventory should be considered to assess whether reliance on the inventory records at the year end will be acceptable.”
I understand the first sentence. But I don’t understand the second sentence. Could you please explain? and are they referring to the level of adjustments made to the inventory records or the inventory itself ?
are they saying that the level of adjustments made to inventory, should be considered to assess whether the inventory records at the year end can be relied upon?
and for the 4th audit risk given in the answer key, stating ”
A sales-related bonus scheme has been introduced in the year; this may lead to sales cut-off errors with employees aiming to maximise their current year bonus.
What does a sales cut-off error mean ?
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