ACCA · Question 10 · Audit and Assurance
CASE 2: AGRIGROW TECH LTD
AgriGrow Tech Ltd develops automated drone-based irrigation systems. They employ 500 seasonal workers during peak harvest. The payroll master file is updated by the HR clerk, who also processes the weekly payroll run. Seasonal workers are paid in cash. The warehouse manager orders drone parts, receives the goods, and authorizes the purchase invoices for payment. AgriGrow recently implemented a new cloud-based inventory system, but the IT manager left, leaving the system with no password complexity requirements.
QUESTION:
Which of the following substantive procedures would provide the most reliable evidence regarding the VALUATION of the drone parts inventory at year-end?
Answer options:
Attend the year-end inventory count and perform test counts from the floor to the inventory listing.
Compare the unit cost of a sample of drone parts on the inventory listing to recent purchase invoices.
Review the inventory listing for any negative balances.
Obtain a written representation from management stating that inventory is valued at the lower of cost and net realizable value.
18 questions · hints · full answers · grading
Expert