You are the senior on the Archer Technologies, Inc. audit. Archer has been an audit client for a number of years.
accounting
Description
You are the senior on the Archer Technologies, Inc. audit. Archer has been an audit client for a number of years. The company manufactures and assembles electronic components used in various industries. The company has three plants located in two states. The company’s manufacturing operations include producing items patented by Archer as well as using other branded parts under licensing agreements.
The company assembles the Archer manufactured parts along with purchased components to create the Archer product line. Some components are end products, which are sold directly to distributors. Other products are considered sub-components, which are sold to other electronics firms or assembled into products sold under the Archer brand.
The company’s inventory includes over 500 types of items. The company’s accounts had the following balances:
Raw Materials and Purchased Parts…………………$1,500,000
Work-in-Process……………………………………….. 750,000
Finished Goods………………………………………… 2,300,000
You have obtained an understanding of the company, its environment, and internal control systems and have made the following risk assessments related to inventory:
Inherent Risk………………………………… High
Control Risk…………………………………. Moderate
REQUIRED:
Identify what could go wrong in accounting for and reporting the inventory accounts; that is, what types of misstatements could occur – be specific.
Identify the audit objectives related to inventory. Be specific in your answers.
List the types of audit evidence that would be appropriate for the inventory accounts and what might be audit procedures to obtain the evidence.
Instruction Files
Archerauditevidence2021.doc
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