Response to the following problem:
Brown, CPA, is auditing the financial statements of Big Z Wholesaling, Inc., a continuing audit client, for the year ended January 31, 2015. On January 5, 2015, Brown observed the tagging and counting of Big Z's physical inventory and made appropriate test counts. These test counts have been recorded on a computer file. As in prior years, Big Z gave Brown two computer files. One file represents the perpetual inventory (first-in, first-out) records for the year ended January 31, 2015. The other file represents the January 5 physical inventory count.
Assume:
1. Brown issued an unqualified opinion on the prior year's financial statements.
2. All inventory is purchased for resale and located in a single warehouse.
3. Brown has appropriate computerized audit software.