Question

1. On page 59 about 3/4 of the way down the page (5th paragraph) (Health Management, Inc.) it states that “… several BDO Seidman auditors questioned, investigated, and fretted over that item.” (the in-transit inventory). On the top of the next page (page 60) Exhibit 1 lists the audit procedures BDO Seidman applied. Keeping in mind these two citations and the fact that Health Management, Inc.’s DFO (Drew Bergman) informed the audit team about the in-transit inventory on the first day of fieldwork do you think the BDO Seidman auditors did enough to satisfy themselves that the inventory existed? Support your answer. contemporary auditing knapp 11th edition was used.

Answer 1

No auditor should verify physical inventory , check inward outward happen before physical count , related purchase , sale order, obtained details on transportation, check loading records, related communication with other party,obtain subsequent delivery proof to satisfy in transit, direct confirmation should be soughted.