ACC614 Week 5 Assignment CAATs Application Inventory with Boos & Becker Inc

Name

ACC 614: Accounting & Fraud Detection

December 19, 2022

Week 5 Assignment: CAATs Application: Inventory with Boos & Becker Inc.

Read problem 9.53 CAATs Application: Inventory on pages 405 and 406 of the textbooks and

complete the following:

• In general, and without regard to the preceding facts, discuss the nature of CAATs and list

the various audit uses of such packages.

• List and describe at least five ways CAATs can be used to assist in all aspects of the audit of inventory of Boos & Becker Inc. (For example, CAATs can be used to read the inventory master file and list items and parts with a high unit cost or total value. Such items can be included in the test counts to increase dollar coverage of the audit verification.) (Hint: Think of the normal audit procedures in gathering evidence on inventory when the client makes a periodic count; then think of how these could help in this particular client situation.)

In order to undertake automated IT audit processes, CAATs (Computer Assisted Audit Techniques) employ computer systems. Due to this, massive data can be collected. Analyzing this trove of information will allow you to do things like the following:

Examination of Recent Developments.

 Analyses and Summaries

 Reports on aging

 Manage your books with precision thanks to real­time, computerized access to your financial transactions whenever, wherever, and however much you need. Assisting with maintaining a balanced ledger.

 Caps on Spending

 Changes and Credits: Identifying Discount Amounts Offered and Approved on Sales and Purchases (Section VI).

 Keeping track of where inventory is kept, how much of it is for sale, and how much of it has been sold is a crucial part of any successful business. Giving management the flexibility to alter stock levels based on actual sales data.

By running test scenarios with CAATS (Computer Assisted Audit Techniques), Boos & Becker Inc. may come up with a strategy that will help them get ahead of the problem and fix it in the future. With CAATS, a system can be set up in which the vendor code is kept in an inventory/vendor master file, enabling a price check of the items on the market. This will help assure their continued viability in the market.

To ensure that a purchasing strategy is in place, CAATS can review and analyze all relevant historical files to identify product trends, patterns, and needs. Third, CAATS can look at the overall worth of stock. Check the prices against the going rate in the market.

CAATS can analyze the disparities between inventory turnover and the gross margin, the budget, and prior periods. Since 2015 (Louwers)Using CAATS to collect information on the most recent purchase or usage of an item (preferably a high­priced item) for the purpose of monitoring its sales. In addition, it’s important to monitor the industry as a whole and the market as it fluctuates.

References

Louwers, T.J., Ramsay, R, J., Sinason, D.H., Strawser, J.R., & Thibodeau, J.C. (2015). Auditing

& Assurance Services (6th ed.). McGraw­Hill.