Amazon Assignment, Current Issue Summary and Textbook Problems –

Amazon Assignment, Current Issue Summary and Textbook Problems –

Business Finance –



Consider and discuss the specific risks and nature of the company you will be auditing and create comprehensive work programs for the Inventory, Warehousing, and Payroll accounts and cycles.

Submit a 350 word document that includes the following:

analytical procedures, etc. as well as other considerations such as sample size and sample methodology.




Write a 525- to 700-word summary.

Research a recent article on auditing inventory, warehousing, or payroll.

Apply what you learn to your future or current job.




20-20 (Objectives 20-2, 20-3) Following are some of the tests of controls and substantive tests of transactions procedures often performed in the payroll and personnel cycle. (Each procedure is to be done on a sample basis or using audit software.)

  • 1. Reconcile the monthly payroll total for direct manufacturing labor with the labor cost distribution.
  • 2. Examine the time card for the approval of a foreman.
  • 3. Recompute hours on the time card and compare the total with the total hours for which the employee has been paid.
  • 4. Perform a surprise payroll payoff and observe employees picking up and signing for their checks.
  • 5. Compare the employee name, date, check number, and amounts on cancelled checks with the payroll journal.
  • 6. Trace the hours from the employee time cards to job tickets to make sure that the total reconciles, and trace each job ticket to the job-cost record.
  • 7. Use audit software to account for the sequence of payroll checks in the payroll journal.


  • a. Identify whether each of the procedures is primarily a test of control or a substantive test of transactions.
  • b. Identify the transaction-related audit objective(s) of each of the procedures.

21-21 (Objectives 21-1, 21-3, 21-5, 21-6, 21-7) The Frist Corporation has the following internal controls related to inventory:

  • 1. Only authorized inventory warehousing personnel are allowed in inventory storage areas.
  • 2. All inventory products are stored in warehousing areas that are segregated from other storage areas used to house equipment and supplies.
  • 3. All inventory held on consignment at Frist Corporation is stored in a separate area of the warehouse.
  • 4. The inventory purchasing system only allows purchases from pre-approved vendors.
  • 5. The perpetual inventory system tracks the average number of days each inventory product number has been in the warehouse.
  • 6. Microchips are embedded in each product and when inventory items are removed from the warehouse to shipping, radio-frequencies signal a deduction of inventory to the perpetual inventory system.
  • 7. On a weekly basis, inventory accounting personnel take samples of inventory products selected from the perpetual inventory system and verify that the inventory is on-hand in the warehouse and that the quantities in the listing are correct.
  • 8. On a weekly basis, inventory accounting personnel select inventory items on hand in the warehouse and verify that the item is included in the perpetual inventory listing at the correct amount.
  • 9. The perpetual inventory system subtotals the quantity of inventory in the system and interfaces with the general ledger system on a daily basis to ensure quantities agree.
  • 10. The perpetual inventory system will not accept inventory additions without the recording on a valid receiving report.

For each of the internal controls:


  • a. Identify the related transaction-related audit objective(s) affected by the control.
  • b. Describe risks the control is designed to mitigate.
  • c. Design a test of control to determine if the control is operating effectively.