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(b) While the refrigeration units were undergoing modernisation Lamont outsourced all its

时间:2021-04-25 19:43:43 解答: 517 次

(b) While the refrigeration units were undergoing modernisation Lamont outsourced all its cold storage requirements

to Hogg Warehousing Services. At 31 March 2007 it was not possible to physically inspect Lamont’s inventory

held by Hogg due to health and safety requirements preventing unauthorised access to cold storage areas.

Lamont’s management has provided written representation that inventory held at 31 March 2007 was

$10·1 million (2006 – $6·7 million). This amount has been agreed to a costing of Hogg’s monthly return of

quantities held at 31 March 2007. (7 marks)

Required:

For each of the above issues:

(i) comment on the matters that you should consider; and

(ii) state the audit evidence that you should expect to find,

in undertaking your review of the audit working papers and financial statements of Lamont Co for the year ended

31 March 2007.

NOTE: The mark allocation is shown against each of the three issues.

正确答案:

(b) Outsourced cold storage(i) Matters■ Inventory at 31 March 2007 represents 21% of total assets (10·1/48·0) and is therefore a very material item in thebalance sheet.■ The value of inventory has increased by 50% though revenue has increased by only 7·5%

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