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ACC403 - Auditing 1 "Audit Wrap-Up" Please respond to the following (two paragraphs only): · Create a scenario that demonstrates specific ways in which management could manipulate transactions...

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ACC403 - Auditing 1

"Audit Wrap-Up" Please respond to the following (two paragraphs only):

· Create a scenario that demonstrates specific ways in which management could manipulate transactions impacting inventory values that the auditing team might not detect. Recommend key strategies that the auditor could implement in anticipation of such manipulation. Justify your response.

· Discuss the difference between a subsequent event and a subsequent discovery of facts, and determine the auditor's responsibility for each event after the audit report is complete. Support your position.

Answered Same Day Dec 26, 2021

Solution

David answered on Dec 26 2021
132 Votes
Auditing
Question 1
A potential situation where transactions may be manipulated by the management and has impact
on the accuracy of the inventory values involves the misreporting of sales by overstating the
same thereby understating the inventory levels. This may be done by the management in order to
present a favorable top line which might lead to higher incentives for the management. One of
the key strategies in order to deal with the situation would be better internal controls which
would reduce the overall audit risk by ensuring that sales transactions have a verifiable trail and
accurate records with regards to the underlying date of transaction and...
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