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AUDITING INA COMPUTERISED ENVIRONMENT $[200$ MARKS$]$

Uly Window Glass Co $($Lily$)$ is a glass manufacturer, which operates from a large production facility.

where it undertakes comtinuous production $24$ hours a day, seven days a week. Also on this site

are two warehouses, where the company' s raw materials and finished goods are stored. Lily's

year end is $31$ December.

Uly is finalising the arrangements for the yearend ifventory count, which is to be undertaken on

$31$ December $2012.$ The firished windows are stored whthin $20$ aisles of the first warehouse. The

second warehouse is for large piles of raw materials, such as sand, used in the manufacture of

glass. The following arra regements have been made for the irwentory count:

The warehouse manager will supervise the count as he is most familiar with the irwentory. There

will be ten teams of courters and each team will contain two members of staft, one from the

finance and one from the manufacturing department. None of the warehouse staff, other than

the manager, will be irrolved in the count.

Each team will count an aisle of firished goods by courting up and then down each aisle. As this

process is systematic, it is not felt that the team will need to flag areas once counted. Once the

team has firished counting an aisle, they will hand in their sheets and be given a set for another

aisle of the warehouse. In addifon to the above, to assist with the imventory counting, there will

be two teams of counters from the internal audit department and they will perform invertory

counts.

The count sheets are sequentially mumbered, and the product codes and descriptions are printed

on them but no quamities. if the counters identify any imentory which is noton their sheets, then

they are to enter the item on a separate sheet, which is not numbered. Once all counting is

complete, the sequence of the sheets is checked and any additional sheets are also handed in at

this stage. All sheets are completed in ink.

Ary damaged goods identifed by the courters will be too heavy to more to a central location.

hence they are to be left where they are but the counteris to make a now on the inventory sheets

detailing the level of damage.

As Lily undertakes comtinuous production, there will continue to be movements of raw materials

and firished goocs in and out of the warehouse during the count. The se will be ke pt to a minimum

where possible.

The level of work$-$in$-$proggess in the manufacturing plant is to be assessed by the warchouse

manager. It is likely that this will be an immaterial balance. In addtion, the raw materials

quantities are to be approximated by measuring the heigith and width of the aw material piles.

In the past this task has been undertaken by a spedalist, however, the warehouse manager feels

confident that he can perform this task.

Required

For the audit of the irwentory cycle and year end imemory balance of Lily Window Glass Co: $\text{'}$

$[20$ marks$]$

$($f$)$ Describe audit procedures that could be carried out using computerassisted audit

techriques $($CAATS$)$; $(10$ marks$)$

bi$)$ Explain the potensaladvantages of using CAATs; and $[$Smarks$]$

$($i$)$ Explain the potensaldisadvantages of uing CAATs. $[$s marks$]$

Note limit pour answers to the case study given.

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