Question

Management makes assertions about the presentation and disclosure of inventory in the financial statements. Which of the following is not a substantive auditing procedure related to these assertions?

A)Reviewing the adequacy of inventory footnote disclosures.
B)Confirming inventory balances with major suppliers.
C)Inspecting inventory cutoff procedures.
D)Analyzing the consistency of inventory valuation methods.

Answer 1

Inspecting inventory cutoff procedures is the option that is not a substantive auditing procedure related to management's assertions about the presentation and disclosure of inventory in the financial statements.

Step-by-step explanation:

Of the options provided, inspecting inventory cutoff procedures is not a substantive auditing procedure related to management's assertions about the presentation and disclosure of inventory in the financial statements.

Substantive auditing procedures are those that gather evidence to support the accuracy and completeness of the financial statements. In this context, reviewing the adequacy of inventory footnote disclosures, confirming inventory balances with major suppliers, and analyzing the consistency of inventory valuation methods are all substantive auditing procedures.

Inspecting inventory cutoff procedures, on the other hand, is a test of control rather than a substantive auditing procedure. It focuses on assessing whether the cutoff procedures in place are effective in ensuring that inventory is properly accounted for in the financial statements.