Summarizing Obsolete Inventory
Using IDEA. For this exercise, your client, Bright IDEAs Inc., has provided you with a listing of inventory as of year end. To analyze the amount of obsolete inventory, as reported by the client, the auditor must complete a series of related steps:
1. Import the client's database of inventory on hand (pp. 187 200 of the IDEA Workbook). You may have already completed this step in Chapter 3.
2. Summarize items identified as obsolete by the client(pp.201-204oftheIDEAWorkbook).
Required Data available on McGraw-Hill Connect âˆTM Inventory 2015.asc
Required:
Complete the preceding steps and answer the following questions:
a. What percentage of the dollar amount of the client's inventory has been identified as obsolete?
b. What effects would the findings in part (a) have on the auditor's assessment of the risk of material misstatement? What accounts and assertions are most likely influenced by these findings?